Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Changing of the Guard Ceremony

Mr. Hunt: asked the Secretary of State for Defence if he will take steps to ensure that the Changing of the Guard ceremony at Buckingham Palace can be fully maintained on a daily basis during 1976.

The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): Regrettably, the level of operational and other unavoidable commitments falling on the Guards Division and other troops will not permit the Changing of the Guard ceremony at Buckingham Palace to take place daily throughout the year. However, every effort will be made to ensure that the ceremony takes place daily from April to September, which is of course the main tourist season.

Mr. Hunt: Does the hon. Gentleman realise the intense disappointment that is caused to tourists and many other visitors to London who go to the Palace only to find that there is no ceremony on that day? Surely our defences must be in an even more parlous state than we had imagined if we cannot muster a handful of men just once a day to perform this ceremony, which is such a major tourist attraction for our country.

Mr. Brown: I think that the hon. Gentleman underestimates the effort that goes into the Changing of the Guard ceremony. While the primary role of the Household Troops in London is the performance of public duties, it is necessary to train for operational duty and to allow for periodic leave. Additionally, there

is a commitment in respect of security duties, particularly in Northern Ireland, and for duty with the United Nations force.

Mr. Lipton: How much does it cost to put on this ceremony, which is one of the main tourist attractions in London? My hon. Friend's rather indecisive reply, that we shall have the ceremony for one month, or on alternate days, or at odd times, when the public are not informed beforehand, will cause a lot of disappointment to children and adults.

Mr. Brown: Offhand, I could not give an answer on how much the ceremony costs. I should need notice of that question. However, I believe that whatever the cost, it is well worth it. I believe that the majority of the people of this country would agree with me. I think that my hon. Friend is being less than fair in suggesting that we shall simply have the Changing of the Guard ceremony at odd intervals. I have already indicated that it will be carried on throughout the summer tourist season.

Mr. Townsend: I recognise the importance of this ceremony at Buckingham Palace, but may I try to persuade the Minister to review the whole situation? Is he aware that no fewer than 100 Regular soldiers are employed on guard duty at London and Windsor on an average day? Is it not time that some of these duties, particularly at Windsor, were taken over by such personnel as Beefeaters? Does the Minister not agree that it is high time that such fit, experienced and well-trained soldiers were employed on operational duties and not simply on static ceremonial sentry duty?

Mr. Brown: It seems that confusion reigns on the Opposition Benches. The hon. Member for Ravensbourne (Mr. Hunt) talked of a handful of men, and now the hon. Gentleman is talking about 100 men at a time. Bearing in mind the need for reliefs, that figure becomes about 300 men. I think that we have got it just about right.

Civilian Employment (Scotland)

Mr. Dalyell: asked the Secretary of State for Defence what are the causes of delay in setting up civilian defence jobs in Scotland.

The Minister of State for Defence (Mr. William Rodgers): If my hon. Friend is referring to dispersal, there is no delay.

Mr. Dalyell: Is not the reality of this situation that the Civil Service unions have seen the example of the Forestry Commission, which uprooted itself from Basingstoke to go to headquarters in Edinburgh and now, faced with a demand that the Scottish forests be the responsibility of a Scottish Assembly, has to find other headquarters for those responsible for the English forests? If they pick up The Scotsman newspaper these days, is it any small wonder that the unions are extremely reluctant to move to a part of Britain which they may think may be separate in a few years' time?

Mr. Rodgers: As my hon. Friend will guess, I do not think that I can involve myself in the question of Scottish forests, which is the issue he raises. However, in so far as he makes a very serious reference to the experience of Civil Service staffs, I can only repeat that consideration of devolution will not affect the Government's plans for dispersal.

Mrs. Bain: Does the Minister accept that many of us on the SNP Bench often believe that Cabinet Ministers cannot see the wood for the trees? Beyond that, however, will he accept that many people in my constituency are gravely concerned about the dispersal of defence jobs in view of the fact that the nature and the types of jobs being brought to the area have not been disclosed and discussed with the local community?

Mr. Rodgers: I am not sure whether the hon. Lady wants or does not want defence jobs. I can only repeat that a decision has been made by the Government and we propose to honour it.

Mr. Cartwright: Does my right hon. Friend accept that there is very serious concern in my constituency about the possibility of transferring thousands of Quality Assurance jobs from Woolwich to Glasgow? As this would involve the expenditure of millions of pounds and add seriously to the many employment problems in South-East London, and as many of the key professional and technical staff involved have already indicated their unwillingness to move to Glasgow

would not this impair the whole operation?

Mr. Rodgers: I am aware that there are some issues upon which the Government cannot win. My hon. Friend has been very forthcoming in rightly drawing my attention to the problems which would arise for his constituents were a decision made which would affect them. But the Government's intentions on dispersal, very carefully considered and announced last year, cannot be carried out unless some of those who have previously found jobs in the south of the United Kingdom find jobs in future in development areas and areas of high unemployment.

Private Davidson

Mr. William Hamilton: asked the Secretary of State for Defence when he expects to complete his inquiries into the circumstances in which Private Davidson, a soldier from Fife, met his death several months ago.

Mr. Robert C. Brown: I have now completed my inquiries and I shall be writing to my hon. Friend.

Mr. Hamilton: That answer is acceptable so far as it goes, but is my hon. Friend aware that it is highly unsatisfactory that the parents of this dead boy should have had to suffer such anxiety for several months, despite my repeated representations to him, personally, in this House and in correspondence? Can my hon. Friend assure me that his reply will contain adequate reasons for this inordinate delay?

Mr. Brown: I give my hon. Friend that assurance. I am sorry that it has taken so long to give him a full report on the situation, but he must understand that following the manslaughter trial there was an appeal, and we could not do anything until that had been concluded. It was also necessary to examine fully the evidence, given at the trial, concerning Private Davidson's unfortunate death.

Iran (Minister's Visit)

Mr. Onslow: asked the Secretary of State for Defence if he will make a statement on his visit to Iran.

The Secretary of State for Defence (Mr. Roy Mason): I visited Iran two weeks ago at the invitation of the Iranian Minister of War. During the visit I had discussions with the Shah, the Iranian Prime Minister and other Ministers and Service chiefs, on a wide range of subjects of mutual interest. I also met British Service personnel who help train the Iranian armed forces.

Mr. Onslow: Will the right hon. Gentleman give us an assurance that he was able to give the Iranian Government a promise of the British Government's full co-operation with Iran in its desire to equip itself against possible aggression? Specifically, will he confirm that he gave positive backing to the Vosper Thorneycroft Harrier-carrier project, in which the Iranian Government is interested? Will he also confirm that there is no understanding with the American Government which might inhibit Vickers from competing for the Iranian submarine order, with the result that the business might land in the lap of the French, instead? The importance of this, politically and industrially, in terms of defence sales in Iran and elsewhere, is such that many people believe that the confidentiality which has applied hitherto is no longer applicable.

Mr. Mason: I am not prepared to break the confidentiality that exists between the Government, our defence sales organisation, and the overseas customers with whom we make defence contracts. It is at their request that confidentiality remains. I discussed equipment matters with the Shah of Iran and his Chiefs of Defence Staffs. They are expressing an interest—I put it no higher than that—in the Harrier-carrier.

Mr. Newens: Did my right hon. Friend discuss the deplorable use of Iranian troops, together with British troops, to suppress a genuine national liberation movement in Oman? Did he make any representations or have discussions about the necessity to withdraw these troops and allow the people of Oman to decide their affairs for themselves?

Mr. Mason: We are members of CENTO, and so is Iran. We have a responsibility to maintain stability in the Gulf. Iran, Jordan and ourselves are

playing a part in the Dhofar, with a view to stemming the rebels crossing the South Yemen frontier to cause disruptions in the Gulf.

Mr. Peter Walker: Did the right hon. Gentleman give the Iranian Government any indication whether there would be further cuts in British defence expenditure? If not, will he give us such an indication?

Mr. Mason: I did not give such an indication there; neither can I give it here. That exercise is not far enough down the road for me to give the House any information.

NATO (Standardisation of Weapons)

Mr. Arnold: asked the Secretary of State for Defence whether he is satisfied with the progress being made towards greater standardisation of weapons systems within NATO.

Mr. Mason: I think everyone appreciates that progress will be gradual but alliance members fully understand the need to advance through stronger cooperation within Europe and via the "two-way street" with North America. At a very successful Eurogroup meeting in The Hague on 5th November it was decided to explore further the potential for extending European co-operation between all European members of the alliance. I have arranged for a copy of The Hague communiqué to be placed in the Library.

Mr. Arnold: Does the right hon. Gentleman accept that while it is highly desirable that the new secretariat should be set up and be seen to be working efficiently, that of itself will not provide reciprocal benefits to our defence industries unless they can be sustained by a high level of research and development? Has the time not come for the Government to reverse their policy of seeking to cut such expenditure?

Mr. Mason: The Eurogroup meeting which discussed how best to traverse the path of sharing research and development within European countries agreed in principle to the establishment of a European defence procurement secretariat. At our next meeting, on 8th December, we hope to be able to flesh out that proposal.

Mr. MacFarquhar: In view of widespread Press reports, will my right hon. Friend tell us whether he has been considering the British commitment to the development and purchase of MRCA, with a view to reducing either?

Mr. Mason:: I cannot oblige my hon. Friend at this stage. As far as I am concerned, the MRCA is firmly in our programme. We have indicated how many we want, but have not yet decided on the production figures That decision will not be necessary until early next year, when we come to an agreement with our co-operative partners.

Mr. Goodhew: As Labour Governments cancelled the TSR2, the F111A and the Anglo-French variable geometry aircraft, and as the MRCA is a prime example of co-operation between NATO allies, is the right hon. Gentleman saying that it is not yet firm in the minds of the Government? If so, the sooner he is an ex-Defence Minister, the better.

Mr. Mason: The hon. Member could not have listened to my supplementary answer. As far as the Government are concerned, the MRCA is going ahead, but we cannot yet agree on production figures. It is not yet time to do so. That will be decided in the early part of next year, with our co-operative partners.

Mr. Dempsey: Is my right hon. Friend aware that in the operation of this secretariat there is a danger that if there is standardisation in the production of certain weapons they will be manufactured principally in German plants? Will my right hon. Friend take account of the need to protect this country against any substantial loss of employment in this matter?

Mr. Mason: I am obliged to my hon. Friend. I keep this problem in mind when discussing these matters with my Eurogroup colleagues.

Service Men (Injuries on Duty)

Mr. Ovenden: asked the Secretary of State for Defence if he will appoint a committee to review the working of the Crown Proceedings Act as it affects Service men injured on duty.

Mr. William Rodgers: Not unless there is a case for doing so, of which I am at present unaware.

Mr. Ovenden: Does my right hon. Friend not agree that there is a case for ascertaining whether his Department is properly using an Act which was designed to uphold Service discipline, by preventing Service men making claims in respect of negligence by the Department?

Mr. Rodgers: I am aware of my hon. Friend's deep concern with the problems involving one of his constituents, and of the manner in which he has pursued this case with great tenacity. Though, at his request, I am prepared to consider the matter, the question has been examined many times and no satisfactory solution has been found to the problem as my hon. Friend sees it.

Naval Stores Depot, Bandeath

Mr. Canavan: asked the Secretary of State for Defence when he expects to make a decision about the future of the naval stores depot at Bandeath.

The Under-Secretary of State for Defence for the Royal Navy (Mr. Frank Judd): A decision will follow a detailed assessment of all the implications, taking account of the views of the staff and trade union sides. This is likely to take several months.

Mr. Canavan: Is my hon. Friend aware that a week ago today I attended a meeting of trade union representatives at Bandeath, at which a resolution was unanimously passed rejecting the ill-thought-out closure proposals presented by the so-called specialists? In view of the fact that about 170 jobs are at stake in an area where male unemployment is at least 7 per cent., will my hon. Friend give an assurance that careful consideration will be given to every alternative proposal for the continued use of Ban-death, especially as it has the advantage of being centrally situated and is easily accessible by road, rail and sea.

Mr. Judd: The closure of Bandeath is one of a series of proposals by management consultants which the Ministry of Defence has yet to assess. In assessing them the views of trade unionists will be taken fully into account. The consultants consider that the depot is unsuited to its task, in terms of buildings, acreage and distance from Rosyth. My hon. Friend will appreciate that it is impossible to implement the defence review and its


consequences without adjustments to support services which involve manpower.

Mr. Tebbit: Does the Minister agree that it is a healthy sign that the hon. Member for West Stirlingshire (Mr. Canavan) is now, at last, taking an interest in defence matters, that he is pressing for defence establishments to be kept open, and that he is concerned, on behalf of his constituents, about the effects, on unemployment, of the defence cuts already announced? Will the Minister tell him that he had better await those cuts still to come?

Mr. Judd: I assure the hon. Member for Chingford (Mr. Tebbit) that I always take most seriously my hon. Friend's views—both past and present—on defence.

British Army of the Rhine

Mr. Wellbeloved: asked the Secretary of State for Defence if he is satisfied with the suitability of current exercises in the BAOR.

Mr. Mason: Yes, Sir.

Mr. Wellbeloved: Did these exercises include a test of the capability of reinforcement, from the United Kingdom, of the British Army of the Rhine? Did they also take into account the possibility of reinforcing troops in Northern Ireland from BAOR?

Mr. Mason: We have just completed a very successful exercise of calling up 10,000 TAVR personnel in a joint exercise with the Regular Army. It has been extremely successful. Although the position of Northern Ireland does not arise out of this Question, I can say that we have reduced the troops there to 13 units, rotation is satisfactory, and we can deploy more if necessary.

Mr. Blaker: Have any exercises been conducted to test the removal of the brigade level of command both in respect of the efficiency of our own forces and the effect on co-operation with our allies?

Mr. Mason: On restructuring trials, not yet, but some are planned.

Mr. Alan Lee Williams: Following the Helsinki accord there was an agreement that each side would notify the other of major manœuvres. Will my right hon. Friend assure the House that this part

of the accord was honoured, and will he say whether the Russians have notified him of any manœuvres that they intend to take in the next few months?

Mr. Mason: There is a later Question on this specific matter. I hope to deal with it more fully then.

Mr. Onslow: Why was no use made of the opportunity of this autumn's exercises to test the command structure that will be applied when the brigade group is abolished? Is it not a matter of grave importance that this should be fully evaluated in time for the Defence White Paper and that the suitability of current wireless equipment to the new structure should be looked at now, and not in a year or two?

Mr. Mason: The opportunity was not taken, because it has been necessary to overcome some of the problems which are worrying BAOR commanders on some of the major trials and exercises that we should be having. Those are now being overcome, and restructuring trials will take place in due course.

Fuel Conservation ("Save It" Appeal)

Mr. Tominson: asked the Secretary of State for Defence what part the Army is playing in the "Save It" campaign.

The Under-Secretary of State for Defence for the Royal Air Force (Mr. Brynmor John): During 1974–75 the Army more than achieved its objective in the United Kingdom of reducing 1972–73 levels of consumption by 10 per cent. in the case of liquid fuels and by 6 per cent. in the case of other forms of energy. The Army also expects to achieve these objectives during the current year. Substantial savings are also being achieved overseas.

Mr. Tomlinson: I welcomed that statement about the Army. What is the position with regard to the other branches of the Armed Services?

Mr. John: The other two Armed Services have also met their targets, so that the total overall saving is considerable.

Miss Fookes: Is the Minister sure that in making these savings he is not impairing the efficiency of the Armed Forces?

Mr. John: We are satisfied that the present level of savings can be achieved without unacceptable operational detriment.

Ex-Service Men (Housing)

Mr. Douglas-Mann: asked the Secretary of State for Defence what provision is made for housing members of Her Majesty's Forces on leaving the Services; and whether he considers the provision to be satisfactory.

Mr. William Rodgers: In addition to providing advice on housing matters, the Services operate schemes which are designed to help men and women nearing the end of their service to purchase a house for their retirement. As for renting, we have recently once again drawn the attention of local authorities to the special difficulties of ex-Service men. These arrangements are not ideal, but I think are the best attainable in present circumstances.

Mr. Douglas-Mann: Far from not being ideal, the arrangements are quite inadequate. Does the Minister accept that there is considerable hardship among a large number of Service men leaving the forces, particularly those with short service? Will he initiate discussions with the local authority associations and his right hon. Friends at the Department of the Environment, with a view to creating a special list system or some other proposals along the lines indicated in the Shelter publication on tied housing?

Mr. Rodgers: I agree that there is hardship, and I very much regret it. It was for that precise reason that a circular was sent to local authorities earlier this year. I am certainly willing to discuss the matter further with my right hon. Friend the Secretary of State for the Environment, but I must make it clear that under the present statutes there are limits to what the Government can tell local authorities to do, in terms of the disposal of local authority housing assets.

Mr. Boscawen: The Minister has not given a satisfactory reply. Is he aware that one of the things troubling Service men is the protection given to tenants of furnished lettings, which means that Service men coming out of the forces cannot get back their own homes when they need them most?

Mr. Rodgers:: I think that the hon. Member is misinformed about the provisions of the Act. I have investigated this question when cases have been drawn to my attention. If the hon. Member has a particular case in mind I shall be happy to look into it.

Mr. Woodall: Is my right hon. Friend aware that I have had the utmost cooperation from the Labour-controlled councils in Yorkshire over the rehousing of ex-Service men?

Mr. Rodgers: I am grateful for what my hon. Friend the Member for Hems-worth (Mr. Woodall) said. Many local authorities are co-operative, but a minority are not. I hope that every hon. Member who has influence locally will take note of what has been said today and try to make local authorities more flexible in dealing with a real social issue.

Mr. Farr: The arrangements are inadequate in circumstances in which, as occasionally happens, a marriage breaks up when a family is serving overseas and is living in married quarters. Is the right hon. Gentleman aware that in those circumstances it is often very difficult for the wife and children to be found accommodation anywhere, and the military authorities seem most unwilling to help in any way? Will the right hon. Gentleman please look into that point?

Mr. Rodgers: I shall be happy to do so.

Dockyards (Civilian Apprentices)

Mr. Small: asked the Secretary of State for Defence how many civilian apprentices are currently serving in RN dockyards.

Mr. Judd: 3,096, Sir.

Mr. Small: I appreciate the quality of training which is afforded to civilian apprentices, but can my hon. Friend say whether the formula recently adopted for giving financial aid to encourage training in the private sector is adopted in respect of civilian apprentices in Royal Navy dockyards? Will my hon. Friend pay particular attention to this point, since it would help to improve recruitment in the dockyards?

Mr. Judd: That question is primarily for my right hon. Friend the Secretary


of State for Employment. The present entry of apprentices to dockyards is fully taken up. There is no capacity either in the apprentice training centres or in the ships and shops where more than half the apprenticeships have to be served. There is little scope at present for training additional young people, but we shall always act sympathetically in terms of our responsibilities in this area.

Nimrod Aircraft

Mr. Terry Walker: asked the Secretary of State for Defence whether he will make a statement on the future of the Nimrod aircraft.

Mr. William Rodgers: The Nimrod is an excellent long-range maritime patrol aircraft, which we plan to improve still further to maintain its effectiveness into the 1990s.

Mr. Walker: Is the Nimrod's existence in any way jeopardised by the fact that it has a Boeing rival?

Mr. Rodgers: I think that my hon. Friend was referring to a decision which the Government may in due course have to take between what is known as the Boeing AWACS system and the Nimrod alternative. I cannot anticipate the decision, and I cannot say when we might have to take it, but with current pressures on the defence budget the cost of the alternatives will have to be taken fully into account.

Mr. Warren:: Bearing in mind that there are at least six Nimrod aircraft surplus to the requirements of the Royal Air Force, will the Minister recall Air Commodore Scrimgeour from NATO, where he is chairman of the committee examining the future NATO airborne early warning requirement, and tell him that it is about time his committee looked at the British Nimrod as well as its American rival?

Mr. Rodgers: I think that there is no doubt in the minds of those principally involved in NATO that there is a Nimrod alternative, and we are very anxious that it should be fully considered.

Mr. Younger: Is the right hon. Gentleman aware that we are anxiously looking for concrete evidence that there will be a two-way street in defence procurement? Will he bring home to our friends in other

countries that when we have bought expensive equipment from them we expect them to give a fair chance to British equipment, which in many respects is better?

Mr. Rodgers: On this matter there is nothing between the hon. Gentleman and the Government. The hon. Gentleman's point of view has been forcefully expressed by my right hon. Friend the Secretary of State for Defence on a number of important occasions.

Iceland (Fishing Limits)

Mr. Wall: asked the Secretary of State for Defence what naval protection is being given to British trawlers fishing in the high seas off Iceland.

Mr. Brotherton: asked the Secretary of State for Defence if he is satisfied with the arrangements to defend British fishing vessels off the coast of Iceland.

Mr. Speaker: I understand that these Questions are to be answered at the end of Question Time.

Low-Flying Aircraft

Mr. David Steel: asked the Secretary of State for Defence if he will make a statement on the complaints sent to him by the hon. Member for Roxburgh, Selkirk and Peebles of low-flying aircraft over Peel Hospital.

Mr. John: The hon. Member will be aware from previous correspondence that Peel Hospital lies within an extensive area that is regularly used by military aircraft for low-level training, but that it is clearly laid down in the regulations that, in recognition of the special needs of Peel Hospital, no flying below 2,000 feet should take place within one nautical mile of the hospital. I have called for an investigation into the most recent complaints and I shall write to the hon. Member as soon as the results are available.

Mr. Steel: Is the hon. Gentleman aware that what concerns me is that after he extended the protected area in response to complaints back in February there were subsequent complaints in April, when he wrote to me saying that the new instructions had not yet percolated through? We are now in November, and there have been further complaints. Surely the instruction should


have percolated through by this time? I shall be grateful if the Minister will look into the matter thoroughly, and I look forward to hearing his explanation why the instructions do not seem to reach the people flying the aeroplanes.

Mr. John: The hon. Gentleman is making an assumption about the results of the investigation which is not justified at this stage. Of the complaints in April, one was about an incident that came about because the instructions had not yet percolated through. The other aircraft were revealed, on investigation, to have been conforming to the regulations, but because of climatic difficulties, or because of the surrounding countryside, the sound was magnified so as to make the aircraft appear to be breaking regulations when they were not.

Mr. Monro: I am grateful to the hon. Gentleman for the correspondence that I have had from him about low-flying aircraft in the south of Scotland. Does he agree that there is still a great deal of unhappiness about the frequency of low flying, which I accept must be undertaken by the Royal Air Force to some extent? Will he reconsider the matter before the spring, when low flying affects farming, and particularly lambing?

Mr. John: The hon. Gentleman will not be surprised if I tell him that the matter is under almost constant review because of his own and other hon. Members' representations. As he realises, we have to fly low, and low flying must be done where it will cause minimum disruption to people's lives. That means that it must be done in the more rural areas. Within that restriction, we try to share it out as fairly as possible. There is no evidence that Scotland is having an undue share of low flying.

Mr. Gwynfor Evans: In view of the distress caused throughout the Carmarthen constituency by low-flying aircraft, will the Minister press for the rerouting of the exercise "Advent Express?" Perhaps the people of Pontypridd would enjoy a visit.

Mr. John: I am very interested in the hon. Gentleman's prescription for low flying, which is that it should be directed over urban areas. If that is what his party is saying, I am sure that the people

of Pontypridd and industrial South Wales will welcome that news!
We carry out only the minimum of low flying necessary for operational efficiency, and we take infinite pains to try to avoid all sensitive routes. We take as much care as we can to avoid disrupting people's lives. Low flying gives us no pleasure. We realise that it causes some heartache to people, but it is unavoidable. We hope that the benefits of the Services' presence in, for example, Carmarthen, outweigh the disruption that we must cause to people's lives.

Mr. Wigley: asked the Secretary of State for Defence what procedures are followed before permission is given for low flying by RAF aircraft over land areas where the agricultural industry may suffer adverse effects from such activities.

Mr. John: We carry out only the minimum amount of low-level training which is essential for operational reasons. In order to affect the least number of people by such flying, we aim to distribute this training evenly over the most sparsely populated areas. When major low-flying exercises are being planned we inform the National Farmers' Union in advance, so that it has an opportunity to make representations and give advance warning to its members. Claims for compensation from farmers, which tend to be relatively few in number, are dealt with sympathetically.

Mr. Wigley: Is the Minister aware that even in rural areas with relatively sparse populations the damage inflicted may be infinitely greater, in terms of the disruption of agriculture and other activities, than in some urban areas? Will he accept that the people of Caernarvon, Merioneth and Carmarthen will see a remarkable correlation in any development of low-flying aircraft?

Mr. John: This is a matter of such burning importance to the hon. Member for Caernarvon (Mr. Wigley) that he has waited until today to raise the matter with me either in letter or Question form. The fact is that we accept that low flying cannot take place without some disruption to the local communities. We hope to minimise this activity, and particularly its effects on agriculture. The hon. Gentleman referred to the people of Merioneth. I hope that he will have a word with his


hon. Friend the Member for Merioneth (Mr. Thomas) and his neighbour in the north about the benefits conferred on local economies by the presence of one or more of the Services.

Security and Co-operation in Europe (Troop Movements)

Mr. Sproat: asked the Secretary of State for Defence if he will make a statement on the extent to which the obligation on all signatories of the documents signed following the CSCE to report all manœuvres involving over 25,000 men within 155 miles of another country has been implemented in the United Kingdom.

Mr. Mason: The United Kingdom has not carried out a major military manœuvre, involving over 25,000 troops which is notifiable under the terms of the CSCE Final Act. As I made clear to the House on 31st October, the United Kingdom gave prior notification of the participation of 6,000–7,000 British troops in Exercise "Deep Express", in accordance with that part of the CSCE Final Act which allows States discretion to notify military manœuvres involving fewer than 25,000 men.

Mr. Sproat: The House will welcome the fact that the United Kingdom and NATO as a whole are fulfilling their obligations, including their voluntary obligations, under the Helsinki agreements. Has any notification of manœuvres—voluntary or obligatory notification—been received from the Warsaw Pact forces? Does the right hon. Gentleman have any evidence that Warsaw Pact forces have carried out notifiable manœuvres without notifying them? What consideration is NATO giving to what it will do if the Soviet Union continues flagrantly and consistently to breach the obligations about notification of manœuvres?

Mr. Mason: NATO has given prior notification of seven military manœuvres, three of them involving more than 25,000 men. West Germany also invited observers to one of its exercises. The Warsaw Pact has not notified us of any manœuvres to date, but we are not aware that it has carried out any military manœuvres involving more than 25,000 men.

Mr. Frank Allaun: Does my right hon. Friend agree that the obligation concerning manœuvres was one of the most valuable outcomes of Helsinki? Is it not helping to prevent a false and even a fatal conclusion being made by a military commander on either side about the intentions of military manœuvres by the other?

Mr. Mason: My hon. Friend is absolutely right. I must inform him that it is all voluntary and not mandatory. He will therefore appreciate, from my first supplementary reply, that we have been affording the Warsaw Pact Powers a great deal of information about our military manœuvres. They have not yet informed us of any of theirs. Certainly it will be to the advantage of NATO and the Warsaw Pact if both sides honour the CSCE agreement. I am hopeful that the Warsaw Pact and Soviet Union will do so.

Air Trooping (Sri Lanka)

Mr. Blaker: asked the Secretary of State for Defence what plans he has for using air trooping facilities through Sri Lanka.

Mr. John: The future air trooping routes to Hong Kong are still under consideration. A Ministry of Defence team leaves tomorrow to study possible staging points, and Sri Lanka is one of the countries that it will be visiting. We have already had preliminary discussions with the Sri Lankan authorities.

Mr. Blaker: Are the Government satisfied that if arrangements are made for air trooping facilities through Sri Lanka or other countries in the area we shall still be able to continue to use those facilities in the event of a disagreement on policy between the British Government and the Government concerned—for example, about the demilitarisation of the Indian Ocean?

Mr. John: As only preliminary discussions have so far taken place, and as the defence team is leaving tomorrow, the hon. Gentleman will appreciate that that, amongst other things, is what we are trying to find out, in order to come to an agreement that is acceptable to both Governments.

Mr. Amery: Is the Minister aware that, on the information at present available to


the House and subject to what the delegation reports, staging troops through Sri Lanka does not seem so very much cheaper than maintaining existing facilities at Gan? There must be a difference between the security of a route firmly under our control and one that is not under our control. What steps has the Minister taken to ensure that, if we should commit what I would regard as the folly of withdrawing from Gan altogether, the staging posts and anchorage facilities will not be taken over by an unfriendly Power?

Mr. John: We believe that the frequency of flights using Sri Lanka would be relatively low. Sri Lanka will be required for the replenishment and rotation of the reduced Hong Kong garrison. On preliminary findings, we are satisfied that the retention of Gan is not justified by the continuation of that task, but we are going into these matters in more detail, and I hope that the right hon. Gentleman will await the conclusion of the talks.

Exports

Mr. Stanley: asked the Secretary of State for Defence what assessment he has made of the effect of the proposed nationalisation of the aircraft and shipbuilding industries on defence exports.

Mr. William Rodgers: In contributing towards the long-term viability of the aircraft industry and in helping British shipbuilding to prosper in the competitive markets of the world, nationalisation should be good for exports.

Mr. Stanley: Does the Minister agree that among the list of aircraft and shipbuilding companies to be nationalised are included many defence production specialist companies whose export records are among the best in the entire spectrum of British industry? Can the Minister give a single tangible piece of evidence to suggest that nationalisation will increase the export prospects of those companies when, on all the historical evidence of nationalisation, exports are likely to suffer as a result?

Mr. Rodgers: I do not wish to cast doubt on the performance of a number of firms, and, indeed, I should be happy to pay them credit where credit is due. But the hon. Gentleman is not totally in touch

with the state and prospects of either the aircraft or shipbuilding industry if he believes that we do not have to think hard again about its organisation. For that reason we shall shortly bring in a Bill providing for the nationalisation of those industries, and it will be given a Second Reading.

Mr. Cronin: Is my hon. Friend aware that in view of the confusion caused by having 125 different shipyards, and the lack of co-ordination between BAC and Hawker Siddeley, nearly all responsible senior officers of the Royal Air Force and Royal Navy look forward to nationalisation with considerable relief?

Mr. Rodgers: It would be wrong of me to comment on my hon. Friend's remarks, but if I had been in his position I should have said precisely the same thing.

Mr. Pattie: Why does the Minister talk about the long-term viability of the aircraft industry when the aircraft industry is viable now?

Mr. Rodgers: I can only say that that is not the view of management or trade unions, as expressed to my right hon. Friends and me.

Mr. Fernyhough: Will my hon. Friend give some estimate of the way in which these very profitable concerns in shipbuilding, ship repairing and in the aircraft industry have managed to take so many hundreds of millions of pounds worth of charity from every Government in power since 1945?

Mr. Rodgers: I am tempted to respond to my right hon. Friend's helpful remarks, but his question will be better dealt with in the Second Reading debate. No doubt it will be answered by my right hon. Friend the Secretary of State for Industry.

Northern Ireland

Mr. Biggs-Davison: asked the Secretary of State for Defence whether he will make a statement on security operations in Northern Ireland, with particular reference to South Armagh.

Mr. Robert C. Brown: As my right hon. Friend the Minister of State for Northern Ireland told the House yesterday, Army operations continue throughout Northern Ireland, supporting the


police in the task of combating violence and terrorism. Extra security measures are in force in South Armagh following recent terrorist incidents and, in particular, the killing of three young soldiers, and the wounding of a fourth, on Saturday. I know that the House will join me in condemning these outrages in the strongest possible terms; in expressing our admiration of the outstanding courage of these soldiers; and in conveying our deepest sympathy to their families and friends. The Security Forces will make every effort possible to bring to justice those responsible for these despicable outrages.

Mr. Biggs-Davison: I join the Minister in his expression of sympathy and admiration, but may I ask what progress has been made in gaining from the Eire Army the same good co-operation as exists between the RUC and the Garda? If that co-operation is not given, will our troops be authorised to fire on terrorists and hotly to pursue terrorists across the border, as they are fully entitled to do under international law?

Mr. Brown: I must emphasise, as did my right hon. Friend the Minister of State yesterday, that we are receiving excellent co-operation from the security forces of the Republic. I do not want to go any further than that, because it would be foolish to imperil the type of cooperation that we are now receiving.

Oral Answers to Questions — NATIONAL ECONOMIC DEVELOPMENT COUNCIL

Mr. Stott: asked the Prime Minister when he next plans to take the chair at a meeting of the National Economic Development Council.

The Prime Minister (Mr. Harold Wilson): While, as my hon. Friend knows, my right hon. Friend the Chancellor of the Exchequer is Chairman of the NEDC, I like to chair the council about once a quarter, as I did at the last meeting, on 5th November. I hope to chair NEDC again quite early in the New Year.

Mr. Stott: In view of the vital importance of the new industrial strategy linked with our economic recovery, is it possible for this House to have a progress report

on the strategy, and any developments? If that is the case, when may we expect such a report?

The Prime Minister: I understand that the next meeting NEDC is likely to discuss the follow-up to decisions taken at Chequers on 5th November. I also understand that in January there will be a full document raising this subject in terms of about 30 industries, including the work of the EDCs. I agree with my hon. Friend that it is right that my right hon. Friend the Chancellor of the Exchequer should report to the House on NEDC, in the follow-up to the meeting of 5th November.

Mr. Budgen: May I ask the Prime Minister to reflect on his last great attempt at a selective regeneration of British industry through the medium of the IRC? Is not the IRC best remembered by the merger between Leyland and BMC, and did not that merger bring great sadness and misery to countless thousands of our fellow citizens?

The Prime Minister: No, Sir. The Bill to set up the IRC was fought by the Conservatives with great vigour and venom, but after it passed into law it received the fullest possible co-operation from industry. The board of the IRC consists, to a large extent, of top industrialists. Unfortunately, for whatever reason, immediately after the change of Government in 1970 the IRC was abolished, but I understand that there have been statements since that time suggesting that Conservatives regretted the decision to abolish the corporation. If the hon. Gentleman is opposed to the IRC, I suggest that he is not speaking for industry.

Mr. Skinner: Before my right hon. Friend chairs the next NEDC meeting, will he announce that the Government will introduce a fairly wide-ranging set of import controls, and will he make a concurrent announcement that those import controls will be introduced as a facet of Socialist planning, but will not be used as a device to lure certain trade union leaders into accepting a continuation of an incomes policy in 1976 and 1977?

The Prime Minister: On the latter point, the trade union leaders speak with more authority on behalf of the trade union movement than does my hon. Friend.
With regard to import controls, I have repeatedly told the House—and I repeated at Rambouillet exactly what I said in the House—that we reject a generalised system of import controls, whether to help our balance of payments, which is rapidly improving, or for any other reason.

Mrs. Kellett-Bowman: Has the Prime Minister got the figures right this time?

The Prime Minister: We have said that where abnormal imports—quite apart from whether dumping can be proved—threaten industries that are vital and needed in our economy for many years to come, and where those imports supplement the effect of world depression, we reserve the right to introduce selective import controls, following the procedure laid down in Article 19 of GATT but not as a general policy. I explained all this at Rambouillet.

Mrs. Thatcher: When the Prime Minister next meets the NEDC will he be able to tell it which ministerial voice on Government economic policy he proposes to follow? Will he follow the voice of the Secretary of State for Energy, who, over the weekend, seemed to want more nationalisation, or that of the Secretary of State for the Environment, who argues that State collectivism is incompatible with liberty and democracy?

The Prime Minister: I thought that that was rather pathetic. I thought that in the last few weeks of the last Session the right hon. Lady did better by speaking only on Thursdays.
The policy of Her Majesty's Government was explained in the Gracious Speech, in my own speech and in the White Paper on the regeneration of industry.

Mrs. Thatcher: On the Gracious Speech, the Prime Minister addressed no part of his speech to the future. The right hon. Gentleman has become a complete memoirs man. Will he now tell us exactly what he proposes to do in the future?

The Prime Minister: It sounds as though the right hon. Lady's public relations department was working overtime this morning.
I spent most of my time on the Gracious Speech talking about our policies for the future. I spent much time talking about

the present policy on inflation—on which the right hon. Lady could not even vote. I also looked forward on the matter of public expenditure, in respect of which the right hon. Lady has not yet told us what cuts she would make.

Oral Answers to Questions — PRIME MINISTER (VISITS)

Mr. Dalyell: asked the Prime Minister when he next hopes to visit Scotland.

The Prime Minister: As the House knows, I was in Scotland on 3rd November to attend the ceremony to mark the inauguration of BP's Forties Field, but I have no plans for a further visit this year.

Mr. Dalyell: Will the Prime Minister apply all his powers of scepticism to the recent over-simplistic approach of certain polls purporting to give the views of the Scottish people? Does he agree that if we are asked in the vaguest terms whether we want more say in our own affairs, we naturally say "Yes"? Does he agree that if one of the real questions is put—namely, do we want to pay more rates and taxes for yet another centralised bureaucracy in Edinburgh—the answer may be different?

The Prime Minister: Yes.

Mr. Thorpe: If the Prime Minister has no plans to visit Scotland, will he at least satisfy the curiosity of people in Scotland, and indeed those outside, on the question whether it is a fact that television commentators and newspaper reporters this morning received copies of the report on devolution? Is it not incredible that on Thursday night hon. Members in all parts of the House will be asked to make an instant judgment on a highly complicated document, which the Press and the media have been able to study in depth?

The Prime Minister: I shall inquire into what the right hon. Gentleman said. I do not know the answer. It is a serious question. There is the question of the rule on confidential early revises, which has been in force for many years, under successive Governments. I have sometimes been critical of it, for the reason mentioned by the right hon. Gentleman. I shall inquire into it, as I


know that there is concern in the House about it—not least because some of these revises find their way into the hands of some hon. Members and not others, which creates unfairness and inequity.

Mr. Donald Stewart: Does the Prime Minister accept that the worst advice that he could take is that of the hon. Member for West Lothian (Mr. Dalyell), who is out of step with the Labour Party—which is out of step with Scottish opinion? Will the right hon. Gentleman tell us what will be his alibi on his next visit to Scotland for the sell-out of his promise on a devolution Bill?

The Prime Minister: Yes, I shall do that without even asking for the hon. Gentleman's alibi for voting with the Conservatives tonight. That will take some explaining in Scotland.
There has been no sell-out on devolution. The White Paper will be published on Thursday. The House will have the opportunity of an early debate on it, especially by those who, as a result of their study of it, form views, but who did not have preconceived notions before they had even read it. We want the House to have that debate. We also want a great national debate in Scotland, in Wales, in England—in Britain as a whole. We want a full debate. We propose to introduce in this Session a Bill which reflects our decisions in the light of that debate. I hope that we can make some progress with it. I cannot be certain. The progress we make depends on the House. But we intend at the beginning of next Session to introduce a Bill and see that it becomes law.

Mr. Gourlay: Is the Prime Minister aware that his words in last Thursday's debate about devolution created a great deal of disappointment among Labour Party members and other parts of the electorate in Scotland? Will he therefore make an early visit to Scotland to announce the date of the elections for the Assembly?

The Prime Minister: No, Sir. That does not arise. I understand that there was a productive and fruitful meeting between my right hon. Friend and hon. Friends in Glasgow last Saturday, which dealt with the whole question of the timetable. I do not believe that the people of Scotland, or the members of the Labour

Party in Scotland, want to see the matter rushed without proper consultation with them, so that they can express a view on what will be a full and complicated White Paper. Nor would they wish to deny to the people of Wales or England the right to express their views on this. We shall at the earliest possible moment, with no avoidable delay, introduce the legislation. I hope that it will be debated this Session. We hope, with the good will of the House, that it will become law in the next parliamentary Session.

Mr. Monro: Is the Prime Minister aware that in the County of Dumfries unemployment has doubled in the past 13 months of Socialism? What steps will the right hon. Gentleman take, other than to issue platitudes from Chequers? Is he aware that, so far, unfortunately, his scheme to help school leavers has had no practical effect, and seems unlikely to have an effect in the next few months?

The Prime Minister: The downward phase in the cycle began under the Conservative Government even before we felt the effect of increased oil prices on this country. The hon. Gentleman knows what is happening all over the advanced industrial word in exactly the same degree. [HON. MEMBERS: "It is 8·4 per cent."] The hon. Gentleman referred to unemployment. The figure is nothing like 8·4 per cent. In Germany the increase is a great deal more. The Opposition will be interested to know that the seasonally adjusted unemployment rate in Scotland, expressed as a percentage of the Great Britain rate, which was 157 per cent. when we took office, has now fallen to 122 per cent.

Mr. Buchan: When my right hon. Friend visits Scotland, will be consider paying a visit to Linwood, so that the workers can thank him for saving the jobs of those at present employed in the Chrysler organisation in Linwood and the Midlands? In the meantime, will he take steps to ensure that warm welcome?

The Prime Minister: The whole House appreciates the deep concern of my hon. Friend and of other hon. Members on both sides of the House. We have a long way to go in the negotiations before anyone can hope to save any part of the Chrysler empire, in view of the negotiations with which we have been presented.


We are striving might and main to save the whole operation, if that is possible, and certainly to save Linwood, because of the high level of unemployment there. There are powerful difficulties in concentrating production on one area. [Interruption.] That would not be the answer, because this is a heavy loss-making sector of the motor car industry, which suffers because no new models have been produced for many years. It will be a very costly operation. It would not help for me to go further in this direction, except to say that I regard it as imperative that Mr. Riccardo returns to this country tomorrow to hear the result of the Government's consideration of these matters.

Mr. Whitelaw: Does the Prime Minister accept that we on the Conservative Benches believe that he is right to have a major debate on the whole devolution prospect, and that there should be a long and proper debate on the whole issue? Does he appreciate that during that debate two tests will be applied to the Government's proposals, as put forward on Thursday? The first is whether they will ensure the unity of the United Kingdom in the future or will lead to its disruption. The second is whether they will lead to more attractive and more efficient government for people in all parts of the United Kingdom. Will those two tests be met by the Government's proposals?

The Prime Minister: Yes, Sir. I thank the right hon. Gentleman for what he said in welcoming the great debate, which is extremely helpful. I felt that he did better than I did in dealing with his hon. Friend who was talking of weeks rather than months. This is a very important subject, which must be fully examined. The unity of the United Kingdom is the whole essence and inspiration of the White Paper, as the right hon. Gentleman will discover. On the question whether it provides effective and efficient organisation in the interests of all the people who are governed within these islands—

Mr. Gordon Wilson: What about Scotland?

The Prime Minister: Scotland is part of one of these islands. I knew that the hon. Gentleman did not know history; it is about time he learnt geography. I thought that Scotland was within these

islands. There are the Orkneys and Shetlands, which cause trouble to certain hon. Gentlemen. 
Dealing with the much more serious question—not the interruption—it will be for the House to decide, when it sees the White Paper, whether the criteria set out by the right hon. Gentlemen are met. I hope that they are. The White Paper is based on the unity of our country, with a maximum possible devolution of control over their own affairs to Scotland and Wales.

Oral Answers to Questions — ICELAND (FISHING LIMITS)

The Minister of State for Defence (Mr. William Rodgers): With permission, I will now answer Questions Nos. 14 and 31.
Yesterday, in reply to a Private Notice Question from the hon. Member for Haltemprice (Mr. Wall), I said that protection measures for our trawlers fishing off Iceland would be amongst questions to be discussed at a meeting with representatives of the industry later in the day. In the light of these discussions, the Government have now decided to provide naval protection, and an announcement to this effect was issued by the Foreign and Commonwealth Office at 11.30 this morning. A copy is in the Library. HMS "Leopard" should be arriving at the fishing grounds about now and further Royal Navy ships are being deployed. RAF flights will continue as necessary.
Today's decision follows months of abortive negotiation with the Icelandic Government. Last year the International Court of Justice ruled that even Iceland's 50-mile zone was not enforceable against British fishermen. But Her Majesty's Government have repeatedly stated their willingness to show flexibility on the amount of fish caught, on conservation areas and on a number of other matters, as was once again made clear to the Icelandic Foreign Minister in a message last weekend. Her Majesty's Government remain ready to resume negotiations at any time.
The Government have taken the decision to provide naval protection regretfully and with reluctance. We had hoped that such action could be avoided. But, in the absence of any sign from the Icelandic Government that they were willing


to talk, we had no alternative to providing the means whereby British trawlers can exercise their legitimate right to fish in international waters.

Mr. Wall: Is the Minister aware that his statement will be greatly welcomed by the trawler fleets? Is it not surprising that the announcement was made at 11.30 a.m. and not first to the House? Will the right hon. Gentleman make clear to the Icelandic Government that this is purely a defensive measure and that there will be no escalation unless there is aggression from Icelandic gunboats? Will the Minister give the House the assurance that commanding officers of Her Majesty's ships will be given clear orders as to their responsibilities?

Mr. Rodgers: To the second and third of the hon. Gentleman's supplementary questions the answer is "Yes". On the first, no discourtesy to the House was intended, but, as I think the House will be aware—it was so aware at Question Time yesterday—we have been anxious that the skippers should remain on the fishing grounds, and an early announcement was necessary to ensure that they did.

Mr. Brorherton: Is the Minister aware that his statement will be greeted with great satisfaction on the south bank of the Humber, although it is a week too late? Now that the Minister realises the responsibilities of Her Majesty's Government to our fishermen who are going about their lawful occasions on the high seas, might I ask him whether the captains of the ships involved will be inhibited in their actions to protect our fishing fleet? Secondly, will the Minister assure the House that ships of the Royal Navy will remain on station for as long as necessary to protect our fishing fleet?

Mr. Rodgers: I think that the hon. Gentleman will regret his opening, ungenerous remarks. The answer to his two supplementary questions is "Yes".

Mr. McNamara: Is my right hon. Friend aware that the decision of Her Majesty's Government to protect our constituents who work on the fishing fleets will be greatly welcomed by their families on Humberside who have displayed considerable concern about the safety of their men? Nevertheless, they, like the whole

House, will regret the necessity for taking this action. Will my hon. Friend say what further diplomatic moves the Government intend to take to try to bring this terrible confrontation to an end, and whether we shall use any of the international organisations to which we belong to facilitate talks so that both sides can reach an honourable settlement?

Mr. Rodgers: I am grateful to my hon. Friend, who fairly summed up the nature of this decision. We believed that it was necessary and we took it, but we regret that these events have occurred. My right hon. Friend the Minister of State for Foreign and Commonwealth Affairs made plain, as he did in his statement to the House last Thursday, that we should welcome a reopening of negotiations any time, anywhere.

Mr. Grimond: Is the Minister aware that whenever there is trouble in Icelandic waters it results in added pressure upon other fishing grounds? Will he give an undertaking that there will be adequate fishery protection on other fishing grounds? Secondly, will he bear in mind that the fishing community is more than ever determined that the utmost speed should be shown in extending our limits and protecting our waters?

Mr. Rodgers: Yes, we are all fully aware of the second point made by the right hon. Gentleman. As for the first, we shall continue to do what we can to protect British fishermen wherever they are.

Mr. Clegg: May I simply thank the Minister for the action he has taken? Many families in Fleetwood will be sleeping soundly tonight after hearing that news. In all fishing ports there is a desire to reach agreement on conservation. Our future, just as much as the future of Iceland, lies in conservation.

Mr. Rodgers: Everyone who is involved in this difficult decision will appreciate the hon. Gentleman's opening remarks. I welcome his wish to see these matters settled by negotiation as soon as possible.

Mr. Prescott: Does my right hon. Friend realise that this military intervention and conflict are about a difference in catch allowance to the value of only £6 million? Is he not concerned


that he is establishing a precedent of military protection at a time when trawlers are looking for new grounds within 200 miles in areas to which 40 countries have claimed a right, and that we may be establishing the principle of military protection in the United States and 40 other countries?

Mr. Rodgers:: No. Although I respect my hon. Friend's views, I think that on this occasion he does not reflect those of the great majority of hon. Members or of those affected outside. This step has been taken with regret—in sorrow, not in anger. I hope that it will not establish a precedent involving the use of naval forces rather than negotiations in solving international disputes of this kind.

Mr. Maxwell-Hyslop: Will the Government, through the International Court, claim damages for the severance of trawl cables carried out in international waters? This is surely the minimum that the Government should do for their own citizens.
Will the right hon. Gentleman tell us whether the orders given to the captains of the naval vessels protecting our fishing fleet are significantly different from those they received from the Conservative Government in the last dispute, or whether they are the same?

Mr. Rodgers: I think that it would be wise for me to say that they are not significantly different but not to discuss more fully in the House now the operational characteristics of our decision. I do not know the answer to the hon. Gentleman's first question, but I will look into it.

Mr. Watt: Is the right hon. Gentleman aware that, while we are all busy watching cod-fishing off Iceland, vast over-fishing is going on just off the Clyde, where a large number of boats are scooping up the last fish in the North-East Atlantic? When will the Government recognise that only an early extension of our own limits to 200 miles will solve the conservation problem in the North Sea?

Mr. Rodgers: The important thing to remember is that on this issue we have wanted, and still want, international agreement by negotiation. That is where the Government rest. They have made a reluctant decision. Now I hope there will be a response and that we shall be able

to settle this matter in an adult way round the conference table.

Mr. Younger: We warmly welcome the Government's decision to send in the Royal Navy to protect our fishermen in their legitimate activities in following their trade. Will the right hon. Gentleman, in consultation with the Foreign Secretary, take the greatest trouble to get across to our friends and allies throughout the world that what we are doing is supporting international law which is to allow honest fishermen to carry out their normal business in accordance with international law?

Mr. Rodgers: I appreciate what the hon. Gentleman has said and am happy to endorse it. I am sure that my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs, who is present, has taken note of the precise terms expressed by the hon. Gentleman.

Oral Answers to Questions — BALLOT FOR NOTICES OF MOTIONS FOR THURSDAY 11TH DECEMBER

Members successful in the Ballot were:

Mr. Ivan Lawrence.
Mr. Stanley Newens.
Mr. John Tomlinson.

Oral Answers to Questions — STATUTORY INSTRUMENTS

Ordered,
That the draft Double Taxation Relief (Air Transport Undertakings and their Employees) (Hungary) Order 1975 be referred to a Standing Committee on Statutory Instruments.
That the draft Double Taxation Relief (Taxes on Incomes) (Faroe Islands) Order 1975 be referred to a Standing Committee on Statutory Instruments.—[Mr. Edward Short.]

BUSINESS OF THE HOUSE

Motion made, and Question proposed,
That if, at this day's sitting, an Amendment proposed to the Motion for an Address in answer to Her Majesty's Speech shall have been disposed of at or after Ten o'clock, the Amendment in the name of Mr. Jeremy Thorpe relating to the National Dock Labour Scheme may thereupon be moved, and the Question thereon shall be put forthwith.—[Mr. Edward Short.]

Mr. Henderson: On a point of order, Mr. Speaker. I regret rising


to oppose this motion, but first may I say on behalf of my hon. Friends how much we welcome your practice of selecting more than one amendment for debate and voting tonight? But I regret that the second amendment selected, that standing in the name of the right hon. Member for Devon, North (Mr. Thorpe) and the names of his right hon. and hon. Friends, is one which has the support of only 13 Members of the House, whereas my hon. Friends and I of the Scottish National Party have tabled six amendments, in two of which we are supported by our hon. Friends from Plaid Cymru. The SNP and Plaid Cymru between us represent 14 Members. I rise to make this protest in some sense of sorrow and in no sense of hostility to the Liberals, but I feel that in the circumstances we are obliged to oppose the motion.

Mr. Crawford: Further to that point of order, Mr. Speaker. I support my hon. Friend the Member for Aberdeenshire, East (Mr. Henderson). It is essential that certain things should be made plain. So far in the debate on the Gracious Speech, no Minister has answered any of the points raised by my hon. Friends the Members for Western Isles (Mr. Stewart), South Angus (Mr. Welsh), Galloway (Mr. Thompson), Carmarthen (Mr. Evans), Caernarvon (Mr. Wigley) or Merioneth (Mr. Thomas). It is necessary that Ministers should have a chance to answer so that the people of Scotland and Wales may know what is happening in this House. Unfortunately, the amendments standing in the name of my hon. Friend the Member for Western Isles have not been selected for vote tonight. It is important, therefore, that the people of Scotland and Wales should know that tonight if we vote with the Conservatives we are in fact voting against the Government.

Mr. Speaker: Order. I do not think that we can now have the discussion which will no doubt take place later on the amendments.

Mr. Thorpe: Whilst accepting the spirit in which this matter has been raised, Mr. Speaker, am I not right in saying that you announced yesterday which amendments would be called today? To the best of my recollection, no objection was raised then.

Mr. Speaker: This is not a great encouragement to the Chair to make experiments in introducing innovations. I have gone some way to meeting the feeling that Standing Orders unduly restricted the possibility of moving amendments formally at the end of the debate. I have tried to meet that feeling. But if a business motion following a recommendation of the Select Committee on Procedure is to be debated at length, I do not think that the Chair will follow this experiment very often in future.

Mr. Gordon Wilson: Is it not possible for the House itself to decide this matter on a Division, Mr. Speaker? If a motion has been presented, not by you but in the name of a Minister, is it not open to hon. Members to oppose it?

Mr. Speaker: Certainly it is in order to do so.

Mr. Powell: Without wishing to detain the House for more than a moment, Mr. Speaker, I suggest that there are two distinct issues here, one of which is entirely a course for yourself in your decision on selection and the second of which is the provision of time or opportunity, which is for the House itself and which is debatable.
I think it will be recognised that it was quite right for hon. Members in the Scottish National Party to raise as a point of debate that we are still very much in an experimental stage in regard to the problem with which you and the rest of the House are confronted, and that it is inherently undesirable that two amendments should be selected and divided upon, upon only one of which debate in the normal orderly way can take place. The only point, therefore, that I would wish to leave on the record is that we recognise that this is very much an experimental procedure and that in no way is this motion—which no doubt will be passed in a moment—a precedent or a solution to the problem which we have.

Mr. Wellbeloved: As it is an experimental motion giving space to an experiment, can my right hon. Friend the Leader of the House, who moved it, explain whether it is his intention to have the whole situation referred to the Select Committee on Procedure so that proper and deep consideration may be given to it?
I want to put a particular point to my right hon. Friend. If it is to be possible for two amendments to be called, it will be quite wrong if that privilege is confined to Opposition parties and not extended to groups within parties which have also put down amendments to the Loyal Address or amendments to other motions. For a long time now, it has been customary to put down amendments without serious intent, the sponsors being secure in the knowledge that they could not and would not be called.

Mr. Heffer: That is not true.

Mr. Wellbeloved: If my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) thinks that it is not true, perhaps he will join the debate and give the House the benefit of his wisdom as he has done on so many other occasions. I contend that it would be wrong if this experiment applied only to Opposition parties and did not extend to the whole House and to groups within the parties.
The second point on which I should like some information from the Leader of the House is whether this experiment might cause a change in the Standing Orders so that Members who had already spoken in the debate on the Queen's Speech would be able to speak again on an amendment which had been selected. If that were the position, I am afraid it would cause a great deal of discontent in the House. If, say, on the occasion of this first experiment we were to suffer listening to a Liberal speaker who has already spoken in the debate, that would be highly wrong.
I therefore hope that the Lord President will take this short debate seriously and will honour the House with a reply to some of the points which have been raised.

Mr. Maxwell-Hyslop: I should have thought the position was much simpler than has been made out. The debate on the Address is the most wide-ranging debate that our procedures allow, to the best of my knowledge. Anybody can discuss anything, in effect, whether or not an amendment is called. This is a debate which is in no way gagged or restricted by the Chair's selection or any selection of amendments. What we are discussing now has nothing at all to do with the

selection by the Chair. It is to do with an exception which the Leader of the House quite properly is making to our Standing Orders, and he can be approached through the normal channels on that matter. If some Members feel that they would like to have a vote, which, of course, is quite different from a debate, they are at liberty through the normal channels to make representations to the Leader of the House.
It would be wrong to represent what is a negotiation through the normal channels as being in some way a criticism of the Chair's selection. This is not to do with the Chair's selection. It would be if it were a normal debate, in which what hon. Members may say is closely circumscribed by the Chair's selection, but this is not the case. If hon. Members have not taken part in the debate and said what is burning them up, it is more likely to be because they could not be bothered to sit through five days of debate than that they have been restricted by the Chair.

Mr. Skinner: When you consider this matter, Mr. Speaker, I hope you will take into account the fact that one reason why my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) rose to his feet to make that rather inane point about Members putting down amendments about which they are not too serious is the fact that one of the things that have motivated him lately during the current series of attempts to catch your eye is not unconnected with the fact that he is touting for votes on the Liaison Committee.
As you know, Mr. Speaker, when amendments have been put down to the Address or to any other Government proposals during the past 18 months, and perhaps on other occasions, some of my hon. Friends, usually the chairman of the Tribune Group, have made serious representations to you, not merely to remind you that amendments are on the Order Paper, but also, if possible, to try to instruct you to call those amendments—

Mr. Speaker: Order. As I have repeatedly said, I always welcome the hon. Member's help but I do not think I would be prepared to take his instructions.

Mr. Wigley: Further to the point made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop), may I mention two matters which are pertinent to the situation? First it is the right of Members who have participated in the debate in the course of five days to have the points which have been raised by them answered. This is a very relevant matter. In the debate which we have had, many of the points raised from the benches in my part of the House have not been answered and, indeed, could not be answered.
Secondly, the interpretation of votes, as we have seen earlier, is based on voting with Labour or with the Conservatives. Unless amendments are allowed to be called, little opportunity is provided for third opinions to get through.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): What all this is about is an attempt to implement a recommendation of the Select Committee. You made your selection yesterday, Mr. Speaker. The reason why I put the motion down is to enable the House to vote on the amendments which have been selected by you, Mr. Speaker. It is as simple as that. It is an attempt to help the House. No doubt you, and certainly I, will watch this experiment to see how it goes.

Question put:—

The House divided: Ayes 337, Noes 11.

Division No. 2.]
AYES
[3.57 p.m.


Abse, Leo
Cooke, Robert (Bristol W)
Gower, Sir Raymond (Barry)


Adley, Robert
Corbett, Robin
Graham, Ted


Allaun, Frank
Corrie, John
Grant, Anthony (Harrow C)


Archer, Peter
Cox, Thomas (Tooting)
Gray, Hamish


Armstrong, Ernest
Craigen, J. M. (Maryhill)
Grimond, Rt Hon J.


Ashley, Jack
Crawshaw, Richard
Grocott, Bruce


Ashton, Joe
Cryer, Bob
Hamilton, James (Bothwell)


Atkins, Rt Hon H. (Spelthorne)
Cunningham, G. (Islington S)
Hamilton, W. W. (Central Fife)


Atkins, Ronald (Preston N)
Cunningham, Dr J (Whiteh)
Hampson, Dr Keith


Atkinson, Norman
Dalyell, Tam
Hardy, Peter


Bagier, Gordon A. T.
Davies, Denzil (Llanelli)
Harrison, Walter (Wakefleld)


Bates, Alf
Davies, Ifor (Gower)
Harvie Anderson, Rt Hon Miss


Bean, R. E.
Deakins, Eric
Hatton, Frank


Beith, A. J.
Dean, Joseph (Leeds West)
Havers, Sir Michael


Bennett, Andrew (Stockport N)
Dempsey, James
Hayhoe, Barney


Benyon, W.
Doig, Peter
Hayman, Mrs Helene


Bidwell, Sydney
Dormand, J. D.
Healey, Rt Hon Denis


Biggs-Davison, John
Duffy, A. E. P.
Heath, Rt Hon Edward


Bishop, E. S.
Dunlop, John
Heffer, Eric S.


Blenkinsop, Arthur
Dunn, James A.
Hicks, Robert


Boardman, H.
Dunwoody, Mrs Gwyneth
Higgins, Terence L.


Bottomley, Rt Hon Arthur
Edge, Geoff
Horam. John


Bottomley, Peter
Edwards, Nicholas (Pembroke)
Hordern, Peter


Bowden, A. (Brighton, Kemptown)
Edwards, Robert (Wolv SE)
Howe, Rt Hon Sir Geoffrey


Boyden, James (Bish Auck)
Elliott, Sir William
Howell, Denis (B'ham, Sm H)


Boyson, Dr Rhodes(Brent)
Ellis, John (Brigg &amp; Scun)
Howells, Geraint (Cardigan)


Bradford, Rev Robert
English, Michael
Hoyle, Doug (Nelson)


Braine, Sir Bernard
Evans, Fred (Caerphilly)
Huckfield, Les


Bray, Dr Jeremy
Evans, John (Newton)
Hughes, Mark (Durham)


Brown, Sir Edward (Bath)
Ewing, Harry (Stirling)
Hughes, Robert (Aberdeen N)


Brown, Hugh D (Provan)
Eyre, Reginald
Hughes, Roy (Newport)


Brown, Robert C. (Newcastle W)
Fairgrieve, Russell
Hunter, Adam


Brown, Ronald (Hackney S)
Farr, John
Hutchison, Michael Clark


Buchan, Norman
Faulds, Andrew
Irvine, Rt Hon Sir A. (Edge Hill)


Buchanan, Richard
Fernyhough, Rt Hon E.
Irvine, Bryant Godman (Rye)


Buchanan-Smith, Alick
Fitch, Alan (Wigan)
Irving, Rt Hon S. (Dartford)


Budgen, Nick
Flannery, Martin
Jackson, Miss Margaret (Lincoln)


Butler, Adam (Bosworth)
Fletcher, Raymond (Ilkeston)
James, David


Butler, Mrs Joyce (Wood Green)
Fletcher, Ted (Darlington)
Janner, Greville


Callaghan, Jim (Middleton &amp; P)
Fletcher-Cooke, Charles
Jay, Rt Hon Douglas


Canavan, Dennis
Fookes, Miss Janet
Jenkins, Hugh (Putney)


Cant, R. B.
Foot, Rt Hon Michael
Jenkins, Rt Hon Roy (Stechford)


Carmichael, Neil
Forrester, John
Jessel, Toby


Carter, Ray
Freeson, Reginald
John, Brynmor


Carter-Jones, Lewis
Freud, Clement
Jones, Alec (Rhondda)


Cartwright, John
Garrett, John (Norwich S)
Jones, Arthur (Daventry)


Clarke, Kenneth (Rushcliffe)
Garrett, W. E. (Wallsend)
Jones, Barry (East Flint)


Clemitson, Ivor
George, Bruce
Jones, Dan (Burnley)


Cocks, Michael (Bristol S)
Ginsburg, David
Jopling, Michael


Cohen, Stanley
Glyn, Dr Alan
Kelley, Richard


Colquhoun, Mrs Maureen
Godber, Rt Hon Joseph
Kerr, Russell


Concannon, J. D.
Gourlay, Harry
Kilroy-Silk, Robert


Cook, Robin F. (Edin C)
Gow, Ian (Eastbourne)
King, Tom (Bridgwater)




Kinnock, Neil
Neubert, Michael
Stanbrook, Ivor


Kitson, Sir Timothy
Newens, Stanley
Stanley, John


Knight, Mrs Jill
Newton, Tony
Steel, David (Roxburgh)


Lamborn, Harry
Noble, Mike
Stewart, Rt Hon M. (Fulham)


Lamond, James
Nott, John
Stoddart, David


Lamont, Norman
Ogden, Eric
Stokes, John


Lawrence, Ivan
Onslow, Cranley
Stonehouse Rt Hon John


Leadbitter, Ted
Orbach, Maurice
Stott, Roger


Lee, John
Ovenden, John
Stradling Thomas, J.


Le Marchant, Spencer
Page, Rt Hon R. Graham (Crosby)
Strang, Gavin


Lester, Jim (Beeston)
Paisley, Rev Ian
Strauss, Rt Hon G. R.


Lewis, Arthur (Newham N)
Pardoe, John
Summerskill, Hon D Shirley


Lewis, Ron (Carlisle)
Park, George
Swain, Thomas


Lipton, Marcus
Parker, John
Taylor, Mrs. Ann (Bolton W)


Litterick, Tom
Parry, Robert
Tebbit, Norman


Loveridge, John
Pattie, Geoffrey
Thatcher, Rt Hon Margaret


Loyden, Eddie
Pavitt, Laurie
Thomas, Ron (Bristol NW)


Luard, Evan
Perry, Ernest
Thorne, Stan (Preston South)


Lyon, Alexander (York)
Peyton, Rt Hon John
Thorpe, Rt Hon Jeremy (N Devon


McAdden, Sir Stephen
Powell, Rt Hon J. Enoch
Tierney, Sydney


McCrindle, Robert
Prescott, John
Tinn, James


McCusker, H.
Price, C. (Lewisham W)
Tomlinson, John


MacFarquhar, Roderick
Price, David (Eastlelgh)
Tomney, Frank


McGuire, Michael (Ince)
Prior, Rt Hon James
Torney, Tom


Mackenzie, Gregor
Radice, Giles
Townsend, Cyril D.


Mackintosh, John P.
Raison, Timothy
Tuck, Raphael


McMillan, Tom (Glasgow C)
Rathbone, Tim
Urwin, T. W.


McNamara, Kevin
Rees-Davies, W. R.
Wainwright, Edwin (Dearne V)


Mahon, Simon
Renton, Tim (Mid-Sussex)
Wainwright, Richard (Colne V)


Marks, Kenneth
Richardson, Miss Jo
Walker, Harold (Doncaster)


Marquand, David
Ridley, Hon Nicholas
Walker, Terry (Kingswood)


Marshall, Dr Edmund (Goole)
Rifkind, Malcolm
Wall, Patrick


Marshall, Jim (Leicester S)
Roberts, Albert (Normanton)
Walters, Dennis


Mason, Rt Hon Roy
Roberts, Gwilym (Cannock)
Ward, Michael


Mates, Michael
Roberts, Michael (Cardiff, NW)
Watkins, David


Mather, Carol
Roderick, Caerwyn
Watkinson, John


Mawby, Ray
Rodgers, George (Chorley)
Weetch, Ken


Maxwell-Hyslop, Robin
Rodgers, William (Stockton)
Weitzman, David


Mayhew, Patrick
Rooker, J. W.
White, Frank R. (Bury)


Maynard, Miss Joan
Rose, Paul B.
White, James (Pollok)


Meacher, Michael
Ross, Stephen (Isle of Wight)
Whitehead, Phillip


Mellish, Rt Hon Robert
Ross, Rt Hon W. (Kilmarnock)
Whitelaw, Rt Hon William


Mendelson, John
Sedgemore, Brian
Whitlock, William


Meyer, Sir Anthony
Selby, Harry
Willey, Rt Hon Frederick


Millan, Bruce
Shaw, Arnold (Ilford South)
Williams, Alan Lee (Hornch'ch)


Miller, Hal (Bromsgrove)
Shaw, Michael (Scarborough)
Williams, W. T. (Warrington)


Miller, Mrs Millie (Ilford N)
Sheldon, Robert (Ashton-u-Lyne)
Wilson, Alexander (Hamilton)


Mitchell, R. C. (Soton, lichen)
Short. Rt Hon E. (Newcastle C)
Wilson, Rt Hon H. (Huyton)


Molyneaux, James
Short, Mrs Renee(Wolv NE)
Winterton, Nicholas


Monro, Hector
Sillars, James
Wise, Mrs Audrey


Montgomery, Fergus
Sims, Roger
Woodall, Alec


Moonman, Eric
Skinner, Dennis
Woof, Robert


Morris, Alfred (Wythenshawe)
Small, William
Wrigglesworth, Ian


Morris, Charles R. (Openshaw)
Smith, Cyril (Rochdale)
Young, David (Bolton E)


Morris, Rt Hon J. (Aberavon)
Smith, Dudley (Warwick)
Young, Sir G. (Ealing, Acton)


Morrison, Hon Peter (Chester)
Smith, John (N Lanarkshire)
Younger, Hon George


Mudd, David
Snape, Peter



Mulley, Rt Hon Frederick
Spearing, Nigel
TELLERS FOR THE AYES:


Murray, Rt Hon Ronald King
Spriggs, Leslie
Mr. Donald Coleman and


Neave, Airey
Sproat, Iain
Mr. Joseph Harper.


Nelson, Anthony
Stallard, A. W.





NOES


Bain, Mrs Margaret
Reid, George



Crawford, Douglas
Stewart, Donald (Western Isles)
TELLERS FOR THE NOES


Evans, Gwynfor (Carmarthen)
Thompson, George
Mr. Douglas Henderson and


Kilfedder, James
Welsh, Andrew
Mr. Dafydd Wigley.


Watt, Hamish
Wilson, Gordon (Dundee E)



MacCormick, Iain

Question accordingly agreed to.

Ordered,
That if, at this day's sitting, an Amendment proposed to the Motion for an Address in answer to Her Majesty's Speech shall have been disposed of at or after Ten o'clock, the Amendment in the name of Mr. Jeremy Thorpe relating to the National Dock Labour Scheme may thereupon be moved, and the Question thereon shall be put forthwith.

EUROPEAN COMMUNITY (DOCUMENTS)

Mr. Spearing: On a point of order, Mr. Speaker. It will be within the recollection of the House that the Leader of the House, in accordance with the


recommendation of the Scrutiny Committee, recommended that we consider Documents R/2102 and R/2447 of 1975 from the European Community as part of the debate today. This is understandable, particularly in view of the Scrutiny Committee's recommendation. The second document concerns Community economic guidelines for 1976, and it has been debated in this House twice before for an hour and a half.
However, this is the first time when the record of such documents being part of the debate has neither been part of the Question nor part of the rubric on the Order Paper. I hope that this difficulty may be got over in some way, otherwise there will be no record in the official Journal or in this debate that the documents have been dealt with in this way.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Further to that point of order, Mr. Speaker. I announced in the Business Statement last Thursday that these two EEC documents were relevant to the debate. I did this in accordance with two recommendations from the Scrutiny Committee. The first recommendation was with regard to Document R/2102. In its 33rd Report the Scrutiny Committee recommended that the document, which dealt with measures necessary to combat a recession, should be taken into account in any debate concerning economic matters in general. In the Scrutiny Committee's 38th Report it made a similar recommendation with regard to Document R/2447, to the effect that it should be taken into account in the context of any future debate on the economy.
I looked into the possibility of putting them on the Order Paper today but was advised that this is never done during

the debate on the Address. I announced them last Thursday, they appeared in Hansard, and I confirm today that they are relevant to the debate.

Mr. Speaker: The hon. Member for Newham, South (Mr. Spearing) notified me in advance of the point of order he wished to raise. I have been into the matter and I confirm what the Leader of the House has said. It is not the practice to publish this information in the form of a rubric on the Order Paper. As the right hon. Gentleman has said, it is on record in Hansard that these documents would be considered today.

DEVOLUTION (WHITE PAPER)

Mr. David Steel: On a point of order, Mr. Speaker. I am concerned about the exchange that took place at Question Time between my right hon. Friend the Leader of the Liberal Party and the Prime Minister about the pre-circulation of the White Paper on devolution. The Prime Minister gave a clear reply that he would be looking into the question. May I submit that this is a matter for the House as a whole and not just the Government? May I ask whether you will undertake to look into this issue, because if it is correct that the White Paper is circulating in advance among Press and television commentators, what it means is that Members of this House of all parties—including Labour Back-Bench Members—will be put in the position on Thursday of having to give instant comment on a long and complicated document. This will not show Parliament in a very good light, especially when we shall be answering questions from those who have had ample time to study the matter.

Mr. Speaker: This is a matter for the Government, not for me. I am, however, keeping my eye on it.

Orders of the Day — DEBATE ON THE ADDRESS

[FIFTH DAY]

Order read for resuming adjourned debate on Question [19th November]:
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which your Majesty has addressed to both Houses of Parliament.—[Mr. Roderick.]

Question again proposed.

Orders of the Day — ECONOMIC AFFAIRS

Mr. Speaker: I have announced the amendments which I have selected. I know already of over 40 right hon. and hon. Members who wish to speak in this debate and I have a pile of correspondence here in which every one of them seems to have an equal right to be called. Many of them will be disappointed. The way in which right hon. and hon. Members can help is by making as few interruptions as possible, by giving way as little as possible and by making speeches as concise as is reasonable.
The second amendment I have selected is that standing in the name of the right hon. Member for Devon, North (Mr. Thorpe) and his hon. Friends:
But humbly regret that the Gracious Speech contains proposals for the docks which, if carried out by an extention of the areas covered by the National Dock Labour Scheme, will lead to further unemployment in those areas, further strangulation of Great Britain's successful ports and higher costs and inefficiency.

4.15 p.m.

Sir Geoffrey Howe: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech contains no practical policies to solve the United Kingdom's serious financial and economic problems, but proposes measures which only increase the powers of a centralised bureaucracy and diminish the freedom of the citizen

I wish to draw attention immediately to the inadequacy of the economic policies foreshadowed in the Gracious Speech. If anything was needed to make that inadequacy clear, it was the confusion and complacency of the Prime Minister's backward-looking speech in the debate last Wednesday. His speech was one that he must have made so many times before in and out of office that I sometimes wonder how Shakespeare ever came to conclude that "Old men forget". In the Prime Minister's case the hardening of the intellectual arteries that is taking place is assuming a particularly unfortunate form. The right hon. Gentleman seems to have forgotten nothing, to have learned nothing and yet still seems to believe that the people of this country have managed to forget everything that he has said. Many of them sometimes wish that they could.
The Prime Minister's speech reflected only too accurately the content of the Gracious Speech. This was, first, because of its total failure to recognise, let alone spell out, the appalling gravity of the economic situation, which is still facing us and which is increasingly perceived by those whom we represent and who look to the Government to give a much firmer lead in solving our problems. In human terms, the most striking and yet quite inescapable feature of our situation must be the high and rising level of unemployment. Today's figures, seasonally adjusted, show that in the United Kingdom as a whole unemployment has risen by 36,800 to a total of 1,125,300 while vacancies have fallen by about 9,000.
We also face continuing stagnation of production and inescapable reductions in the nation's living standards imposed by the continuing rise in oil prices. The Prime Minister made some reference to this. It is a pity that he was not prepared to do so 21 months ago. We also have a continuing substantial deficit in our balance of trade at a time when other countries have long since ceased to be content with meeting just their non-oil deficit. Our deficit of £2,000 million is now almost exactly equal to the expected deficit for all of the OECD countries taken together.
Next there is the gross imbalance of a situation in which the State is taking and spending more than 60 per cent. of the nation's total wealth. This is a state


of affairs which makes the recovery of industry impossible and which places on the shoulders of our people a burden of taxation and control which is and which will be seen to be absolutely intolerable. The Prime Minister failed entirely to spell out the continuing and overwhelming gravity of our inflation, not just at its present pace, but even if—and one must be doubtful about this—the Government succeed in reducing the level to anything near their target.
All of these factors add up to a formidable threat to the survival of civilised existence in a democratic society. Britain is still very close to the brink and there is little prospect of our moving away from that brink without leadership of a quite different order from that which the Prime Minister sought to display last week—still less if we have to face the kind of programme foreshadowed in the Gracious Speech.
I shall not say much about what the Prime Minister had to say about the past. He spoke as though he bore no responsibility whatever for our present situation. There was a time when he seemed glad to take the credit for almost everything from clearing the beaches of oil to the success of England in a football match abroad: but not today. He once had the confidence of an impresario of a television quiz show. He has now assumed the mantle of a Soviet historian—anxious only to expunge large tracts of the past from the record.
I take just one example. The Prime Minister was asserting at one point last week that
the die was cast on inflation".—[Official Report, 19th November, 1975; Vol. 901, c. 42.]
and that the die was cast equally in relation to unemployment as long ago as March 1974. What did the Prime Minister and the Chancellor of the Exchequer have to say about that 13 months ago? Six months after the time when they now say that the die had been cast, so that the problems now facing them were inescapable, in a Press conference on 9th October 1974 the Prime Minister said—and it is scarcely credible now:
Unemployment…is beginning to fall;…the pace of inflation and price rises is moderating".

The Chancellor of the Exchequer inevitably found a chance of claiming credit for himself when he said on "Panorama" on 23rd September 1974:
I have cut the inflation rate I inherited by half".
So much for the argument that the die was cast as long ago as March 1974.
Whatever became of the social contract? In the Queen's Speech last year it was described as an essential element in the Government's
strategy for curbing inflation, reducing the balance of payments deficit, encouraging industrial investment, maintaining employment…and promoting social and economic justice."—[Official Report, 29th October 1974; Vol. 880, cols. 49–50.]
Since then, what have we seen? We have had roaring inflation, sagging investment, soaring unemployment, and growing social and economic injustice. No wonder we did not hear a word last week about the social contract, for in the whole history of agreements between man and man no contract has ever been more totally unfulfilled than that.
There is no escape for the Government from their responsibility for the present situation, and it is high time that they faced up to it. Tragically, the Prime Minister's speech contained example after example of self-deception, and there is not possibly time to deal with them all. He said that we were facing the same problems of inflation and depression as other countries: not so; the United Kingdom almost alone faces a situation in which industrial production is at levels below those of five years ago. Our inflation remains twice as high as that of our competitors and looks like continuing to do so.
The Prime Minister suggested that inflation was worse when he took office than it is today: not so. In March 1974 the annual rate was just over 13 per cent. and in September 1974, if we are to believe the Chancellor of the Exchequer, it had been reduced to 8·4 per cent. Today it is up again, on the annual basis, to 26 per cent. What is more, in contrast with other countries, we are still moving into further substantial depression, while the Chancellor of the Exchequer is looking to others—who were more courageous and more honest years ago—to help us by moving out of their own depression as well. It is time for the Prime Minister


and the Government to stop deceiving themselves and to stop deceiving the nation.
What are we to make of the policies actually foreshadowed in the Queen's Speech? We all took some comfort—perhaps unwisely—from the fact of the meeting at Chequers. We noted with some satisfaction that the Government, elected to office on the claim that they had found an industrial strategy which would create something close to a new Jerusalem, had at last recognised the need to set out in search of a new industrial strategy. Some of us were sceptical about the prospect, if only because the meeting was timed to take place, with characteristic sense of timing, on Guy Fawkes' day. It turns out that the scepticism has been wholly justified.
I ask the House to consider for a moment the contrast between the Chequers document and the contents of the Gracious Speech. We were glad to see a statement from Chequers to the effect that the public sector had been pre-empting too large a share of our resources; glad to see it being said that it was essential to restore the profitability of industry, glad to see it being said, above all, that it was for the Government to set about restoring an atmosphere of confidence between Government and industry.
A new spirit seemed to be abroad in the land when the Leader of the House, of all people, said a word or two in praise of profits, but those words turned out to be about as sincere as a recitation of the Beatitudes by Beelzebub—perhaps Beelzebub would have said it a great deal more cheerfully than the Leader of the House. What we find now is a series of measures that have shattered whatever confidence has been implanted as a result of the Chequers statement, a series of measures that, far from doing any good, will do nothing but damage in our desperate situation.
First, the nationalisation of the aircraft and shipbuilding industries will serve only to add to the size of a grossly mismanaged and flatulent public sector and add to the size of the public debt. Secondly, the extension of the dock labour scheme—literally for miles beyond anything that anyone would recognise as a dock—is a charter for the extension of anarchy and blackmail.
Thirdly, there is the final removal, if the Government have their way, of any right for a trade unionist to have an independent right of appeal against expulsion or exclusion from his union, a right proposed by the last Labour Government and now to be taken away. This is an absolute licence for tyranny. Fourthly, instead of anything to comfort and encourage industry, we have the maintenance and extension of price control, a prescription for the extinction of profits, and a prescription for the destruction of jobs.
Why, in Heaven's name, do we have to face this when we have, as my right hon. Friend pointed out during Questions this afternoon, a Government deeply divided amongst themselves. Hon. Members opposite may laugh, but let them listen to the case that I am going to make.
I begin with the Paymaster-General. The Paymaster-General in speech after speech genuinely argues the case for profits and profitability. On the other hand, there are those, like the Secretary of State for Energy, who argue precisely the opposite.
In a speech on 15th October to the Aluminium Federation—[Interruption.]—I invite hon. Members opposite to listen and to say whether they agree. The Paymaster-General said that what industry wanted from the Government was a recognition of the importance of profitability to the private sector, greater continuity in the policies of the Government, and, above all, a conviction in the Government that the success of the private sector was essential to the success of our mixed economy.
He went on to ask himself why the case for profit had not yet got across. He said that the problem was that many people
have not been persuaded by the statements either of Government or employers.
No wonder, when we compare the totally different case being put forward in speech after speech, day after day and month after month by the Secretary of State for Energy.
These deep divisions surfaced yesterday in the two speeches by the Secretary of State for Energy and the Secretary of State for the Environment. The Secretary of State for Energy was addressing,


not surprisingly, the Greater London Labour Party Young Workers' Forum. The Secretary of State for the Environment was arguing precisely the opposite case. He was apparently in such despair of ever getting sympathy for his views within the Cabinet Room in this country that he chose to expose his thoughts to, of all people, members of the Costa Rican Government.
Where does the Chancellor of the Exchequer stand in all this? He often seeks to present himself as a bluff, robust exponent of harsh economic truth, but even he speaks with a most uncertain voice. If we look at what was reported in the national Press on 2nd October—[Interruption]—it is serious enough—

Mr. Deputy Speaker (Mr. George Thomas): Order. Hon. Members heard Mr. Speaker's appeal earlier. Almost every Member shouting wishes to take part in the debate. Hon. Members will help themselves if they will be quiet for a moment.

Sir G. Howe: Government supporters must remember that they are not now taking part in a Tribune Group rally. I wish to quote from a report in the national Press of the uproar at the Tribune Group rally at Blackpool on 1st October. It is interesting that one headline carried on the following day said in bold print:
Healey attack over 'torrent of abuse'.
The report went on in The Times:
With advance knowledge of Mr. Mikardo's speech, Mr. Healey, speaking at Bolton, delivered a devastating counterblast.
So the national Press has that picture of the heroic Chancellor charging into the breach. When we study the headline in the Bolton Evening News for the same day we see it reported that 200 expectant members of the Labour Party turned up at the Bolton Labour club in order to hear the Chancellor make this great pronouncement. We see the report by the only reporter who was able to be there. He writes:
Mr. Healey, who came from Labour's conference at Blackpool, did speak briefly about the movement's unity—but the words he is reported to have said never crossed his lips…Instead of launching his counter attack on the Left, Mr. Healey told a joke about his days in the Army, said thank you for being invited to open the club and drank a pint of bitter.

There is an inescapable ring of truth about that last sentence. So the brave Chancellor, facing 200 comrades, turned tail and declined to tell them the truth. It is no wonder that he has had so little success in saving the nation from the disastrous diet of Socialism that his colleagues are thrusting upon it.
Let me tell the Chancellor something of the policies that he and the Government should be adopting in face of the grave dangers threatening the nation. Let them begin first by abandoning many of the measures foreshadowed in the Gracious Speech which are expensive, provocative and wholly irrelevant to the nation's needs.
Secondly, let the Chancellor and the Government adopt in their place policies which give some substance to the Chequers declaration. If profits, jobs and confidence are to be restored, industry is entitled to look to the Government for practical measures, for prompt acceptance of the Sandilands Report, for relaxation instead of tightening of price control, for deeds instead of words, and for deeds of the right kind.

Mr. John Mendelson: Higher prices.

Sir G. Howe: The hon. Member for Penistone (Mr. Mendelson) shouts, "Higher prices". Higher prices are part of the policy that the Chancellor of the Exchequer is taking credit for wishing upon us. He is claiming credit for the elimination of nationalised industry deficits. That is right. But the inescapable fact that the hon. Gentleman must recognise is that in the circumstances in which we find ourselves today living standards cannot be maintained—the Government say so from time to time. For a time prices are bound to have to rise faster than wages. Otherwise, there is no escape.
That is why, thirdly, there must be a plain recognition of the continuing menace of inflation. Even if everything else were to come right, the Chancellor's target figures until the end of the year would still be much too high. Let the Prime Minister and other members of the Government stop speaking, as they do, of only a few months of hardship and of the need only to give a year for Britain. It will be a much longer haul than that. It is time for members of the Government


to stop raising false expectations and to stop looking for a false dawn.
We welcomed the Prime Minister's recognition last week that an old-fashioned Keynesian reflation would be disastrous. If that message really has sunk in, we should be prepared to look more sympathetically at more selective measures. If the Chancellor remains absolutely resolute in opposition to any general reflation, he can count on our support—

The Chancellor of the Exchequer (Mr. Denis Healey): Like we got it in July.

Sir G. Howe: Let the right hon. Gentleman reflect on the discreditable record of the Labour Party during the years when he and his right hon. and hon. Friends did nothing but oppose the fight against inflation by the previous administration.
Fourthly, it is time for the Chancellor and his colleagues to come clean about public expenditure and to tell us something about his discussions with the International Monetary Fund and about the conditions that he expects it to require if and when he applies for a further tranche of the funds available.
Substantial cuts are inescapable. Speaking on 19th November, the Chief Secretary said that cuts in public expenditure were "absolutely vital". About a month before, the Paymaster-General described them as "imperative". So they are. The Chancellor of the Exchequer knows that only too well. He has even said as much to the Parliamentary Labour Party. So he should stop denouncing those of us who have been urging this course on him for months and he should start today to tell the House and the people the truth about what is inescapable.
I want now to comment on the Chancellor's strategy for the timing and scale of public expenditure cuts and for the handling of the public sector borrowing requirement. The right hon. Gentleman advances two defences of this present inaction. First, he says that the public sector deficit is no bigger than that of some countries in a comparable position. When he made the original claim on 6th November, he was very confident about it. Since then, I have been following this up in correspondence with him, and I

have asked him to spell out the basis on which he reached that conclusion.
This morning, I received a letter hedged about with qualifications making very clear the fragility of the foundation upon which that assertion has been repeated. I shall not weary the House with the entire text of the right hon. Gentleman's letter. But he says that for various statistical and other reasons it is very difficult to make adequate international comparison of public sector deficits.

Mr. Healey: Of course it is.

Sir G. Howe: There is a sharp contrast between that and his confident assertions at the Mansion House and in this House. On two occasions in the course of replying to Questions to Treasury Ministers the right hon. Gentleman said clearly that he gained confidence from the comparability of our position with that of other countries. In his letter he goes on to say that comparable figures for 1975 were obviously not yet available for any country, but that it was possible to get some idea of the orders of magnitude likely to be emerging by using past experience to adjust these tentatively to a general Government basis.
The Chancellor's conclusion is quite important. It is that, broadly speaking, therefore, on the basis of official forecasts it seems likely that the financial deficits on a general Government basis of all three countries mentioned in the letter will fall within the range of 5 to 8 per cent. of GNP. This is also expected to encompass the general Government deficit of the United Kingdom.
What follows from that? The right hon. Gentleman is talking about a general Government deficit ranging between 5 and 8 per cent. of the GNP. We put that at about £5 billion to £8 billion for the general or central Government deficit. We have to add to that a further £3·5 billion for the deficit of local authorities and nationalised industries, and a further £1·5 billion for the additional financial transactions to arrive at a total public sector borrowing requirement. So if the GNP is taken at about £100 billion, 5 to 8 per cent. is a general Government deficit of £5 billion to £8 billion. If we add in the other figures, we arrive at a public sector borrowing requirement of £10 billion to £13 billion.
We get some support for that from what the Chancellor is supposed to have said at a meeting of the Parliamentary Labour Party. He is reported to have said that the public sector borrowing requirement amounted to about 20p in the pound of public spending. If we accept that the public expenditure total is, as set out in the Red Book, £53·5 billion, the Chancellor is implying a borrowing requirement of about £10·7 billion. If we assume that total spending is now £58 billion, the implied borrowing requirement is now about £11·5 billion.
What a ridiculous way to deal with these matters this is. The Chancellor makes generalised assertions at the Mansion House and in reply to questions by the Parliamentary Labour Party, but refuses to substantiate them to the House. It is time that he came clean about this if his policy is to have any credibility.
In fact, the whole basis of his international comparison is gravely misleading. Public expenditure here is a dangerously high proportion of our GNP. Our deficit should be less than that of other countries because the recession, according to the Chancellor, is less deep here, and the tax loss should be lower. Again, as the Chancellor said, to the extent that other economies are reflating, their deficits should be higher. Therefore, the defence is inadequate and conceals rather than clarifies the danger of our economic situation.
The second argument advanced by the Chancellor is that the time is not yet right for lowering the public sector borrowing requirement. He suggests that we should wait until the upturn begins. But he is wrong, because it will not and cannot work like that. We are now dangerously close to the situation where there is no room for an upturn to start. Investment and stocks have reached a dangerously low level. As they begin to pick up, where and how on earth is industry to find the necessary finance?
The Secretary of State for Energy puts his estimate of what is necessary at £6 billion. So how does the Chancellor propose on his time scale to stop the threat of the destruction of still further jobs? It clearly follows that he cannot go on indefinitely deferring inescapable

cuts in public expenditure. The £900 billion in constant price terms proposed for the next financial year will not be enough.
Indeed, the Chancellor told the Parliamentary Labour Party what would be necessary. According to reports on the following day, he said that even to hold next year's level of public spending over the following two years would mean that the average worker would have to pay about 50p in tax and contributions from every extra pound he earned. If that is the situation, the burden of taxes will be intolerable. Indeed, it is already. As we saw last week, widows—the poorest members of the community—just drawing their pension at the age of 60 find that they have immediately risen above the tax threshold. Is that the kind of situation for which Labour Members voted? It is inconceivable.
If we try to take the arithmetic through, we find that the present marginal rate, including national insurance, is just over 40p in the pound. If the Chancellor sees a prospect of contributions of 50p in the situation to which he looks forward, the difference between 40p and 50p—10p extra in income tax—is about £3,600 million. That is the additional burden of public spending to require that level of taxes a year or two ahead.
It would be folly for the Chancellor to believe that he could postpone further action in the direction of public spending cuts for another 18 months. The present situation is the consequence of the incontinence of the Government. In the two years since the Conservative Government left office total public expenditure has increased from £32 billion to £53 billion—an increase of 67 per cent.—while prices went up by only 47 per cent. In each of the last two years for which the Chancellor has been responsible, public spending has been 10 per cent. in real terms above that laid down in the plans left by the previous Government. The incontinence and failure on the Chancellor's part to control the programme for the Government have landed this country in its present desperate serious plight.
The Government must cease pretending. Why do they remain so coy about the realities of the situation that even the increase in prescription charges, about which we heard last week, was announced


in a Written Answer on Thursday rather than disclosed to and discussed in the House during the speech by the Secretary of State for Social Services on Friday? That kind of equivocation will not do.
That is why we urge the Government to drop further nationalisation, and to drop it now, to start now on the reduction of subsidies, to begin now to explain the widespread nature of the cuts, as painless as possible, which will be necessary across a large section of public spending, and to spell out and implement the manpower ceilings for public services about which the Chancellor told the House as long ago as last July. We can no longer go on running into deficit at the rate of £500 per annum per family without continuing to hurtle on a course towards disaster.
The Government must continue to stand firm in their resistance to pay claims in the public sector which are not justified. However much we may sympathise with particular cases, they must have the courage to stand on the policy which they have put forward, which can be criticised in detail, and, instead of misrepresenting the position of the Conservative Party, as the Chancellor tried to do a few minutes ago, to give full credit to our repeated statements both inside and outside this House that we shall support them in that essential task.
The most remarkable contrast of all is that today we find the Secretaries of State for Social Services and Employment, unharried by contrary arguments from this side of the House, never ceasing to argue the proposition that there can be no special cases, that any exception to the policy would destroy it, and that any alternative would be unfair to the 2 million workers who have settled within the policy. This is a question not of an incomes policy or not, on which there are as many opinions in Fleet Street as on both sides of this House, but of how the Government are to recover control of their own wages bill and expenditure.
One cannot help asking the Secretary of State for Employment, for example, whether there is no echo in his mind of the same propositions we hear him mouthing week after week throughout the country, quite rightly, being advanced by members of the previous Government, particularly by my right hon. Friend the Member for Sidcup (Mr. Heath). Is

there no recollection in his mind of his repeated support for claim after claim, for industrial action after industrial action, from the postmen to the miners? Is there no recollection in his mind of the Labour Party's repeated attacks and votes against the attempts of the previous Government to grapple with this same problem? In short, has the Labour Party no sense of shame whatever?
The Prime Minister should cease suggesting that there is any disunity in the Conservative Party, for which I speak. We shall give firm support to any attempt that the Government may make to adopt and follow policies in the interests of this nation. Indeed, we stand ready to implement those policies ourselves.
We call for the support of hon. Members on both sides of the House in condemning the measures now proposed, because the measures foreshadowed in the Queen's Speech totally fail to measure up to the appalling perils facing all the people of this country from price inflation at rates far higher than those of our competitors. They show no understanding of the immense threat to investment and employment in the continued uncontrolled growth of public spending and the vast dependence on borrowed money. They propose nothing to make room, through lower State spending, for lightening tax burdens, which are now bearing down even on the poorest sections of our community and on working people in general. They contain no measures to halt the growth of centralised bureaucracy and the burden of administrative overheads upon industry and commerce.
It is high time for the Government to abandon their partisan dogma, to give up their pursuit of selfish minority interests, and to bring forward economic policies which will help to restore monetary stability and industrial confidence and so encourage the creation of wealth and job opportunities for all the peoples of these islands.

4.50 p.m.

The Chancellor of the Exchequer (Mr. Denis Healey): The official Opposition have asked for practical policies for dealing with our country's economic problems. Given the build-up earlier in the summer about the way in which the Opposition would reconcile their differences and come out with a clear decision


on all the major issues that have divided them for the past year, one might have expected to hear some of the Opposition's practical policies this afternoon, but all that we had from the right hon. and learned Member for Surrey, East (Sir G. Howe) was a flaccid mumbling of Central Office propaganda handouts studded with more irrelevant quotations than we have had since the dear days of Konni Zilliacus. I shall deal with the few points of substance that the right hon. and learned Member for Surrey, East raised, but I want to start by saying something of what has been happening to the economy since we last debated it in July, about the prospects for the coming year, and about our policies for dealing with them.
In the short term, the key to the solution of all our problems remains the control of inflation, and here the record is encouraging. Between June and October the retail price index rose by only 3·9 per cent. This means that inflation has been running at well under half the rate that we had to endure during the first half of this year, and, as I predicted in my Budget speech, the annual rate of inflation in the second half of the year will be between 12 per cent. and 16 per cent.
So far the £6 limit on pay increases has not had a marked impact on the rate of inflation, but if we had not reached agreement on that limit in July we should have seen inflation taking off again at the beginning of next year. As it is, the year-on-year rate of inflation should drop steadily throughout 1976, to under 10 per cent. by the end of the year, provided of course, that there is no unexpected major increase in our import prices in the meantime.
We shall achieve that objective only if the £6 limit is observed as universally in the next eight months as it has been to date. The response of both our industrial workers and our salaried employees has been magnificent, and I think it has demonstrated to the world that whenever it comes to the crunch the sense of unity in the British Isles is far stronger than the disagreements on minor issues. Now that the policy of a £6 limit has been launched so successfully I have every confidence that it will be maintained throughout the year and that the dividend it will bring in terms of a slow-down in inflation will

help in carrying it forward in future years.
Settlements covering about 2 million workers have been notified direct to the Department of Employment, and all are within the pay limit. About 1,000 settlements have been notified through the new procedures, for example in the course of price applications. These cover more than 500,000 workers, some of whom are included in the 2 million whom I have mentioned. Of these settlements, a few were originally outside the policy, and all but two, which are still under consideration, have since been brought within it. In addition, 750,000 workers have been covered by Wages Council proposals for increases in statutory minimum remuneration within the policy. About 3 million people have already settled for £6 or less, and I think the House will agree that this is a most impressive record and a tribute to the Government's wisdom in seeking a voluntary agreement with the trade unions rather than relying on legal sanctions against working people.
The House will have noted that the executive of the NUM has voted to limit its claim next year to £6, and this makes it all the more important that the junior doctors should accept the same sacrifice as the rest of the country is prepared to make for the sake of mastering inflation. Incidentally, if the right hon. and learned Member for Surrey, East is sincere in offering support for this policy I hope that we shall hear him speaking in the country on this matter in these terms to the junior doctors.
The record on the balance of payments is also encouraging. It now seems probable that our current deficit in 1975 will be about half that of 1974. In other words, we shall not only have eliminated the whole of the massive deficit on non-oil trade that we inherited in March 1974 but we shall also have covered one-third of the £3,000 million increase in the cost of our oil this year.
Some of that improvement is, of course, due to the recession, and particularly to the running down of stocks in industry, but we can take pride in the fact that we have at least maintained our share of world trade at a time when competition is fiercer than ever before, and we may even have increased it. It will, however, be difficult to maintain this rate of progress in the next 12 months as the


expected recovery in our output leads to increased imports and the rebuilding of stocks. Moreover, the terms of trade could begin to move against us, and our invisible earnings will be reduced by the payment of interest on past borrowings.
That is one reason why I decided that it would be right to apply to the International Monetary Fund for a loan of £975 million through the first credit tranche and the oil facility. This money is available at substantially lower rates of interest than we could hope to obtain elsewhere, and, as I explained to the House the other day, if we had not decided to apply now, the oil facility might have been exhausted by the time we did so. On inflation and the balance of payments, the record is encouraging.
The position is much less satisfactory on output and employment. It looks as though our GDP may have fallen by nearly 5 per cent. over the past 12 months, the biggest fall that we have seen at any time since the war, but smaller than the fall that most of our major competitors have suffered. There are some signs that the recession in Britain may now be bottoming out. Whereas many of the indicators were falling sharply until May or June, the past three or four months have shown approximate stability in, for example, the trend in industrial production and retail sales. Car registrations also, while erratic from month to month, no longer reveal a declining trend. House building is continuing to increase, and the October CBI inquiry showed an improvement in most of the key indicators, including the general state of confidence and prospects for investment.
An improvement in confidence could herald an end of the massive destocking that has been a major cause of this year's recession in Britain. Next year we should see a modest but accelerating recovery in output, the pace depending in part on the extent of the recovery in world trade. As the Prime Minister told the House last week our major partners at the Rambouillet summit were all confident that the measures they have already taken will produce a steady increase in economic activity over the next 12 months, and they have all stated that they are ready to take further measures if their confidence proves to be misplaced.
Unfortunately, the increase in output on which we can now count will take at least six months to reduce the level of unemployment, and it may be that the lag between output and employment will be somewhat longer this time than at the same stage in earlier cycles. This is even more likely to be true of some of our competitors. In Germany, for example, there is an exceptionally high proportion of short-time working, and in Italy and Japan many workers are carried on the company pay roll even when there is no work at all for them. The unemployment register is unlikely to fall significantly in those countries until all those now on company pay rolls are working full time. Unemployment in Britain is unlikely to be above 1,200,000 by the end of this year—and today's figures confirm this—as I predicted some months ago, and the rate of increase has been falling in recent months. Nevertheless, unemployment is likely to continue increasing for some months into 1976 as a consequence of the fall in output in the second half of 1975.
At Rambouillet the Heads of Government were all unanimous that the most urgent task was
to ensure the recovery of their economies and reduce the waste of human resources involved in unemployment.
The same view is taken by the authors of the two Community documents of which we are invited to take account in today's debate.
So far as Britain is concerned, I have made it clear on many occasions that we cannot plan to reduce the level of employment by a general reflation at this time. That would involve an unacceptable increase both in our balance of payments deficit and in our public sector borrowing requirement. We could not expect to finance either of those increases at a time when our inflation rate is still running so far above that of our competitors, except in ways that would be destructive to the economy—[Interruption.] That is the way that Mr. Barber financed the increase in 1973, by printing money. I have no intention of following that road.
The aim of avoiding a general reflation at this time was endorsed by the recent Trades Union Congress and by the Labour Party conference. In any case,


given the lags to which I have referred, a reflation of demand could not be expected to reduce the level of unemployment before it is in any case likely to be turned down.
I have no intention of making the mistake here which was made by Mr. Barber in 1972. Broadly speaking, experience suggests that £1,000 million-worth of extra demand, achieved for example through a reduction in taxation, generates between 30,000 and 50,000 jobs only after an interval of 12 months. In current circumstances, it is possible to save jobs and reduce the expected level of unemployment much faster and more cheaply by selective measures directed at sectors of the economy which are particularly vulnerable to unemployment in the trough of a recession.
The £75 million-worth of such selective measures which the Government announced in September are likely to save as many jobs in about three months as £1,000 million-worth of demand reflation can save in a year. The temporary employment subsidy, which involves almost no net addition to public expenditure, has already saved 7,500 jobs. Similar methods have been particularly effective for school-leavers. About 3,000 applications were made in the first fortnight after the introduction of the recruitment subsidy on 13th October and I have little doubt that this has contributed to the dramatic fall in unemployment among school leavers from 65,000 a month ago to 40,000 announced today. The fall has been twice as great as is normal in this month. Those figures compare with 158,000 unemployed school leavers in August, so we have reduced that total already by three-quarters.
A total of 93 projects of work creation have already been approved and 13 started, and the £20 million extra for training in the September package excludes provision for another 8,000 places, mostly for young people. Similarly, the selective measures taken to encourage new investment have prompted a substantial increase in private investment. For example, about £12 million has already been committed out of the funds made available to bring forward investment projects which would otherwise have been delayed or gone abroad, and this has generated £69 million-worth of new investment—a ratio of six to one.
The Government are now considering further selective measures intended to save or create jobs during the recession. We have made it clear that we are prepared to seek agreement to limit imports in selected areas, so as to protect firms or industries which will be viable when world recovery arrives but might otherwise suffer crippling damage during the recession.
The Government are also discussing with both sides of industry the means of avoiding in 1977 those bottlenecks which have previously frustrated trade and recovery when output is rising rapidly, as they did in 1973. The £25 million scheme for restructuring the ferrous foundry industry is an example. A substantial further expansion of training facilities will also be required, and we are considering means by which those who become redundant in certain industries, may be helped to move to vacancies in other industries, particularly engineering, when the upturn comes.
All these measures at the micro-economic level are designed to produce a more rapid effect on employment more cheaply than a demand reflation of the traditional type.
I turn to the question of public expenditure and the public sector borrowing requirement. As my right hon. Friend the Secretary of State for Industry made clear last Thursday, while in the short term the control of inflation is the key to our very survival, in the longer term we must aim at improving our industrial performance relative to that of other countries. We must transform our economy into one based on high output, high earnings and full employment and we can achieve this only if we secure a significant improvement in the performance of our manufacturing industry.
This, in turn, depends primarily on what we do about investment in three fields. First, we must improve the rate of investment in manufacturing industry. Second, we have to direct that investment more wisely. Third, and above all, we have to achieve a better return in productivity per unit of investment through better management and labour practices.
I hope that no one will imagine that there is a simple or single answer to the problems of our manufacturing industry. The decline in its relative performance


has been pretty continuous since at least the Second World War, irrespective of the rate of inflation, the rate of return on capital and the decline in profitability. This is not the time to discuss the problems of British industry in detail—we debated them last Thursday—but I hope that both sides of the House will agree on at least one fundamental syllogism.
We could increase the productivity of our industry without any new investment if we could make as good use of our existing plant and equipment as many of our overseas competitors. Indeed, in theory, that would be by far the easiest and quickest way to increase our output and reduce our unit costs. It would have dramatic consequences both in reducing inflation and in cutting the balance of payments deficit. But in so far as the better use of existing capital depends on more economic manning levels, working people will be slow to accept its implications, particularly during a recession, unless they can see new investment taking place to create new jobs.
At the same time, industrialists will be reluctant to undertake new investment unless they are satisfied that it will be fully used. In other words, more investment depends on the better use of investment and the better use of investment depends on more investment. I believe that both sides of industry are nearing the point at which they could strike a bargain for breaking into that vicious circle. I certainly hope so, and I shall do everything in my power to make it possible.
But if we are to get the new investment which all of us so dearly want, the Government must ensure that the economy is managed so that the resources required for this new investment are not pre-empted by either private or public consumption. The central problem here is timing. I will deal now with some of the points made by the right hon. and learned Member for Surrey, East.
All over the industrial world, Governments are now, quite rightly, running public sector deficits higher than at any time since the war—for the obvious reason that the current recession is deeper than any since the war. I hope that the House will forgive me if I demonstrate this fact in detail, particularly as the right hon. and learned Gentleman sought to

obscure some of the facts which I sent him in a letter that he received this morning.
As my right hon. Friend the Chief Secretary to the Treasury pointed out in a Written Answer to the hon. Member for St. Ives (Mr. Nott) on 12th November, the central Government forecast at the time of the May 1975 Budget was 11·8 per cent. of GNP for Ireland, 6·3 per cent. for Italy, 4·7 per cent. for the United States, 4·5 per cent. for Denmark, 4 per cent. for the United Kingdom and 2·5 per cent. for Germany. But we can make a closer and more up-to-date comparison by taking the concept of a general Government deficit as defined in United Nations and OECD national accounts, which, broadly speaking, measures the deficits of central, State and local governments. Information on this basis is available for some countries in 1974 from the official sources quoted in the Paymaster-General's reply to the hon. Member for Braintree (Mr. Newton) on 26th June.
Comparable figures for 1975 are obviously not yet available for any country, but it is possible to get some idea of the orders of magnitude likely to be involved—this was the passage that the right hon. and learned Gentleman quoted—by taking the most recent official forecasts of central Government deficits on national definitions and using past experience to adjust these tentatively to a general Government basis. It is not a perfect way of doing it, but there is no perfect way and I made it clear in my Mansion House speech that there were difficulties in doing this other than in broad orders of magnitude.
However, on this basis, the German general Government deficit was officially forecast last summer as 7·2 per cent. of GNP, and that was taking a July forecast of GNP which may well prove too optimistic. It could be higher. In the United States, the Federal deficit in the financial year beginning 1st July 1975 was forecast at $75 billion to $90 billion. An independent forecast by Data Resources Incorporated gives the figure of $74 billion for the Federal deficit in calendar year 1975. On the OECD basis this would be over 5 per cent. of GNP.
The Italian general Government deficit calculated by similar methods would be around 7½ per cent. of GNP in calendar


year 1975. Our general Government deficit in this calendar year would be some 5·5 per cent. of GNP on the basis of the Budget forecast, and even if it turned out that the PSBR was as high as the £12 billion often quoted in the newspapers, that would represent as a general Government deficit 6·5 per cent. of gross national product. In other words, high as it is, our general Government deficit this year is running at a rate well within the range of other major industrial countries.
Let me return to the more familiar concept of the public sector borrowing requirement which, so far as I know, is unique to Britain, since it covers all spending and lending by all public authorities, not only central and local government, but also the nationalised industries—a much bigger aggregate than the central or general Government deficit.
The size of the PSBR is likely to be somewhat higher this financial year than I forecast last April, partly because the recession had been deeper than we then expected, and that means less tax take and higher expenditure on benefits. However, there has been no significant addition flowing from policy changes, nor is any addition foreseen. We can finance this exceptionally high PSBR at present without fuelling inflation or producing unacceptable increases in the money supply, because companies are investing less than normal and private individuals are saving a much higher proportion of their earnings than in normal times.
Perhaps I should interpolate here that all over the developed world Governments have been baffled by the exceptionally high increase in the savings ratio. It is running at 13 per cent. to 14 per cent. in Britain as against under 10 per cent. in normal times. One of the many uncertainties which bedevil forecasting at present is our ignorance about the precise reasons for this very high savings ratio and our consequent inability to predict whether and to what extent it will fall as inflation and unemployment fall. [HON. MEMBERS: "Inflation."] It is no good saying that it is just inflation because the savings ratio is much higher in Germany than it is in Britain although the inflation there is lower. There is no secure ground for believing that it necessarily depends on inflation. It is not clear

to what extent it depends on employment either. The plain fact is—the right hon. Lady the Leader of the Opposition must accept this—that no one knows why this is so. No one expected it on this scale and, therefore, no one knows precisely how or when it will cease.
Nevertheless, it is difficult to believe that the savings ratio will not fall to some extent as recovery gets under way. It must be our intention to ensure that investment rises. When this time comes, and only then, there will be a danger that the PSBR will crowd out investment if it remains at its present level. A significant part of our current PSBR results directly from the recession and can be expected to disappear when we return to full employment. Even in normal times a substantial PSBR should be expected so that surplus private sector savings can be offset against public sector investment. How large it should be is very difficult to estimate, but it could well be of the order of 4 per cent. of GNP.
However, there remains a substantial gap which the Government must plan to close as recovery resumes, by increasing their revenue, by reducing their expenditure or by a mixture of the two. There is no doubt in my mind that the emphasis must be put on reductions in the planned level of expenditure, as there is little scope for increasing taxation without unacceptable consequences in other areas of the economy.

Mr. Norman Atkinson: I hope that my right hon. Friend will not be influenced by the noises opposite in the sense that he is now taking an apologetic posture for the size of the public sector borrowing requirement when, in his own words, it is not exceptionally high. If it is only 6·5 per cent. of GNP, he has no reason to apologise to the House. He has certainly no reason to start talking about cuts in the public sector.

Mr. Healey:: I dare say that one of my weaknesses as a parliamentarian is that I am not, perhaps, sufficiently apologetic to the party that happens to be sitting on the Benches confronting me. I do not think that any of my hon. Friends would believe that my attitude on these matters was ever calculated to inspire cheers from the Opposition. I assure my hon. Friend


that cheers embarrass me more than they help me. With respect, my hon. Friend did not listen to what I was saying. I was talking about the size of the general Government deficit which is well in line with those of other countries. However, like other countries, we must plan drastically to reduce both the general Government deficit and the public sector borrowing requirement once recovery gets under way. Other countries are planning to do so and so must we. I warn my hon. Friend that if we do not, that big increase in investment, on which he counts as much as I do, will be physically impossible. There just will not be room in the economy for it. This was accepted by the Labour Party conference unanimously because the point was made in the policy document, which was presented by my right hon. Friend the Secretary of State for Energy.
As I pointed out at the Labour Party conference in Blackpool, if all income after tax above £6,000 a year were completely confiscated, the additional yield would be only £450 million—one twentieth of this year's PSBR as I estimated it in the Budget speech. So, if we try to reduce the PSBR by increasing taxation, the main burden would have to fall on average and below average earners who already carry a heavy load.
Moreover, the tax system has become seriously distorted in recent years under successive Governments. I am particularly concerned by the extent to which the balance of taxation has shifted from indirect to direct taxes. Yet at a time when the fight against inflation must take priority, it is difficult to increase indirect taxes, even by what is required to take account of inflation because of the effect on the cost of living. That is why, for example, in my first Budget last year, although I increased the specific duties on drink and tobacco, I did not feel able to increase them sufficiently to take account of the increase in inflation in the last increase. The plain fact is that one always has to strike balances in the light of the priorities of the moment.
The scope for increasing company taxation is equally limited, since much of this would feed through into prices unless it reduced company liquidity and the return on investment. If it did that it would jeopardise the foundation of our industrial policy.
Capital taxes can make a useful contribution towards reducing the PSBR without reducing employment as their resource content is low. But, by the same token, they cannot help significantly to achieve a better distribution of resources inside the economy. This is one of the major objectives that we must seek to achieve in reducing the public sector borrowing requirement. Therefore, there is no escape from it—income tax must be the main source of additional revenue if we seek to reduce the PSBR by increasing taxation.
But income tax is already bearing heavily, not only on the average worker but also on the low paid. I agree with the right hon. and learned Member for Surrey, East about this, but it has been happening under Governments of his colour as well as mine. There are now significant numbers of men and women whose earnings are below the level for supplementary benefit, but who are now being taxed on those earnings. Yet to have kept such people out of tax by further increasing the personal allowances again would have thrown even heavier burdens on the average man and woman. If I had fully restored the real value of personal allowances in my last Budget to the level I fixed in my first, in March 1974, I would have had to increase the basic rate of income tax by a further 3p, to 38p in the pound.
For all these reasons I believe that the Government must plan on reducing substantially the planned level of public expenditure in the years when recovery is assured and the pressure on resources is bound to reach its peak. That is why I warned the House in July that public expenditure programmes could not be allowed any significant increase in the two years beyond the reduced level planned for 1976–77. The precise size and distribution of the required cuts in programmes will of course be announced as usual in the annual public expenditure White Paper. [An HON. MEMBER: "When?"] When it is completed.
Equally important, we must devise more effective ways of ensuring that programmes, once published, are not exceeded in the event. Local authorities in particular, under successive Governments—this happened particularly in the last two years of the previous Conservative Government—have been regularly


spending far more in constant prices than central Government laid down for them. This problem has been made far worse by the exceptionally high rates of inflation in the last few years.
For these reasons the Government have decided, as I told the House in July, to introduce cash limits for those programmes which are appropriate for them. These limits will initially cover approximately half of the public expenditure programmes, on the definition used in the public expenditure White Paper—not the whole. It would be ridiculous to apply cash limits to all programmes, as the right hon. and learned Member for Surrey, East proposed at his party conference the other day, because that would mean cutting the old-age pension if people lived longer and reducing unemployment benefit if more people lost their jobs. The right hon. and learned Gentleman did not seem to have thought of that when he proposed doing that.
But the programmes which do not depend on such variable factors will be subject to cash limits in the next financial year. In particular, the local authorities, as my right hon. Friend made clear on Friday, will not only have cash limits imposed on much of their capital spending, which was always subject to Government control, but will also have cash limits fixed for the rate support grant—and at a slightly lower percentage of their total planned expenditure than last year. This should mean that, provided they stick to the planned programmes, there should on average be little increase in the rates or in rate poundage next spring over the country as a whole.

Mr. Graham Page: Is the limit entirely on the rate support grant and not on the expenditure of local government, however it is raised? Am I to understand that it is not an overall limit on local authority expenditure?

Mr. Healey: We have debated this matter many times. If the local authorities stick to their planned programmes, there should be no significant increase in the rates or rate poundage next spring, and cash limits will then be applying to about 75 per cent. of local authority expenditure—that is, to capital expenditure and to two-thirds of current expen-

diture. [HON. MEMBERS: "Wands-worth?"] With great respect, I should love to know more about Wandsworth in the future, but I am trying to explain an important and complex point.
As I say, if the central Government attempted to control all local authority expenditure, we would not have local government. One must give local government some freedom to decide how to spend its money. But the fact is that, roughly speaking, three-quarters will be directly controlled by cash limits and the rest will be controlled by the political consequences of exceeding limits and then having to raise the rates so as to pay for the excess.
I believe—and I hope that both sides of the House can agree about this—that the Government have taken steps over the last few months, both in applying cash limits and in setting up the consultative council between central Government and local authorities, which give us the best chance we have had in our history to bring local authority spending under some effective sort of control. I hope that we shall not have any unnecessary party arguments about this because my own experience of local officials and councils is that they are desperately anxious to co-operate with central Government in getting some control over a thing which has been getting totally out of control over the recent years, notably in the last two years of the previous Conservative Government and the first year of our Government, when the increase in local authority expenditure was precisely twice that which had been laid down by central Government.
Details on the application of cash limits to central Government Departments will be published around the beginning of the financial year and the Government will then welcome the opportunity of debating them.
I now turn to the alternative policies put forward by the Conservative Front Bench—if they really justify the name of policies, because the right hon. and learned Gentleman's speech presented the usual spectacle of confusion and contradiction—[HON. MEMBERS: "Reading."]—combined with a complacency in the face of his own record which almost baffles the imagination. Having listened to the right hon. and learned Gentleman


on many occasions, I had no problem whatever in preparing to comment on his speech before I have actually heard it. There never was a spokesman the style and content of whose speeches was more predictable.

Mr. Nicholas Ridley: We are all very grateful to the Chancellor of the Exchequer not only for giving way but for adopting many of the things that he has been told to adopt by the Opposition Front Bench. However, what is the virtue now in reading out a written castigation which was prepared before he ever knew he was going to adopt these measures?

Mr. Healey: I have known of the measures that I am going to adopt for a long time. The difficulty has been in knowing what views expressed by individuals on the Conservative Benches and groups of Conservative Members I should regard as the policy of the Conservative Party, because there is no single major issue of economic policy on which the Conservative leadership is not deeply divided. Indeed, as the right hon. Member for Sidcup (Mr. Heath) made clear in a notable speech in Rome last week—not Costa Rica—the strident defence of the crude values of popular capitalism proclaimed by the new leader of the Conservative Party have already alienated millions of those who previously supported it.
Incidentally, if Conservative leaders are determined to carry their party political battles into foreign countries I suppose it is better, like the rt. hon. Member for Sidcup, that they confine themselves to attacking one another rather than attacking their country, like the rt. hon. Lady the Leader of the Opposition and the rt. hon. Member for Leeds, North-East (Sir K. Joseph), still playing Rasputin to his hockey stick Tsarina.
The right hon. and learned Member now claims to support the Government's policy for incomes. He claimed it this afternoon, and "firm support" were his words. But only four months ago he and his hon. Friends voted to deny a Second Reading to the Bill to implement it. They tabled a motion declining to give the Bill a Second Reading. But when the right hon. and learned Gentleman

had a chance actually to vote against the Second Reading, he and his hon. Friends preferred to skulk in their tent. I can tell the right hon. and learned Gentleman that I shall never go to him for lessons in courage, after watching his behaviour on that night in July when he and his party dodged giving any view whatever on the most important problem facing the nation. Meanwhile, the right hon. Member for Leeds, North-East—

Mr. Peter Tapsell: Will the right hon. Gentleman give way?

Mr. Healey: No. I was specifically asked by Mr. Speaker not to give way.
The right hon. Member for Leeds, North-East—

Sir G. Howe: The Chancellor must desist from this pattern of falsehood. He knows that the Opposition tabled an amendment setting out precisely their view of the Government's policy, urging the Government to adopt controls on public expenditure and urging them to adopt cash limits and to adopt many of the policies that he is now claiming as his own. Our views are on record. We voted in support of them on that amendment, and the right hon. Gentleman should cease denouncing them.

Mr. Healey: The right hon. and learned Gentleman is too good a lawyer to use the word "falsehood" so lightly. The statement that I made is literally true.

Sir G. Howe: We voted for our amendment.

Mr. Healey: The right hon. and learned Gentleman tabled a motion declining to give a Second Reading to the Bill which made a reality of our counter-inflation policy. That having been defeated, he abstained and persuaded the bulk of his right hon. and hon. Friends to abstain on the Second Reading of the Bill. Nothing can erase the memory of that cowardly night.
On unemployment the Conservative Party is even more divided. Half of the Conservatives tried to win votes by weeping crocodile tears over a level of unemployment which their own policies would double. But the right hon. Member for Leeds, North-East—bless his heart—continues to claim that unemployment


is only half as high as it appears and that between September and October it was actually falling.
When the Government took steps in September to moderate the rise in unemployment we were fiercely attacked by spokesmen of the Conservative Party in one of their fits of instant opposition. Yet the main target of their attack, the work creation scheme, had been specifically recommended by the right hon. Member for Lowestoft (Mr. Prior) in a speech a few weeks earlier.
But the conclusive demonstration of their unfitness to form an Opposition, still less to present themselves as potential leaders of a Government, is their position on public expenditure. When they were in office, public expenditure rose over 3 per cent. as a percentage of our gross domestic product. It was 6 per cent. higher in their last year of office than the year before. They fought two General Elections last year on promises to increase public expenditure by amounts of up to and beyond £3,000 million. They have consistently voted, even in opposition, for increases in public expenditure and against reductions made by the present Government—on defence, on Maplin, the Channel Tunnel, as my right hon. Friend pointed out last week. The hon. Member for St Ives, one of their official spokesmen and the high priest of fiscal probity, attacked me only the other day for cutting capital expenditure in the public sector too far.
At the same time they promise to cut taxes. They are going to abolish the capital transfer tax and the land development tax. They are going to reduce the highest rate of income tax to 50 per cent. Incidentally, it is comforting to see that the right hon. and learned Member for Surrey East has abandoned his campaign for flooding the United Kingdom with thousands of Bay City Rollers and is concentrating on managers and professional people who have left the United Kingdom. But once again his mathematics is as unreliable as his judgement. There would be an immediate loss in yield of £200 million if the highest rate of income tax was reduced to 50 per cent.—something which could not conceivably be made up by the return of his well-heeled prodigals.
Yet in face of all these commitments to increases in public expenditure and cuts in taxation, he still claims that he wants to cut the public sector borrowing requirement and cut it now. He had the neck to lecture me about it today. Yet he will not tell us by how much or at what cost in employment or where the cuts in public expenditure must fall.
I am going to do it when the levels of employment are increasing and the cuts are being taken up by demand in the private sector. The right hon. and learned Gentleman wants to cut the borrowing requirement this year and to make savage cuts next year when there is no chance of the slack being taken by a general increase in activity.
He will not tell us where the increases in taxation must come. Until he answers some of these questions and renounces some of the follies he has committed himself to in recent months, his posture will remain one of self-evident and undignified hypocrisy.
The Conservative Party's policies are confused and contradictory because its leadership is deeply divided on every issue of importance to the nation. Rampant opportunism is the only factor that keeps them together and similar opportunism has led the Liberal Party and other fringe groups to join their quarrelling ranks—an attraction which will play for one night only.
I ask all hon. Members who take the country's problems seriously to unite and rout the most unholy alliance ever seen in the history of British politics.

5.33 p.m.

Mr. Graham Page: Because of the shortage of time, I shall not endeavour to follow all the points made by the Chancellor of the Exchequer. I ask the House to turn for a moment to the relationship between the Government and local government and its effect on the economic state of the nation.
The Chancellor of the Exchequer just touched on the question of local government expenditure and the Prime Minister referred to it fairly substantially in his speech on Wednesday. Today's debate will concentrate on economic affairs, but a vital factor in that is the level and trend of public expenditure, and in one year of this Government total public expenditure has gone up by more than 50 per


cent. The Prime Minister said in his speech last week:
The House knows that a significant part of the increase in public expenditure over the past two or three years has been in local government. Comparing 1974–75 with 1973–74, the increase in local authority expenditure is about 25 per cent. of the total increase in public expenditure which the Conservatives attack and criticise.
That figure of 25 per cent. of total public expenditure is not surprising. The spending of local government accounts for 30 per cent. of total public spending, and the fact that it accounts for only 25 per cent. of the increase in total public expenditure might be a cause for congratulations to local government.
There are two reasons for increases in local government expenditure. First, there are the increased functions placed on it by this House. That was recognised by the Prime Minister in his speech, but he appears to be doing nothing about it in the policy outlined in the Gracious Speech. The speech says:
My Ministers will pursue vigorously their programmes of social reform by legislative and other means, within available resources.
That is imposing more responsibilities and duties on local government.
The Speech goes on:
They will take energetic action to encourage the provision of more houses in both public and private sectors; and following from a comprehensive review they will bring forward recommendations for future housing finance policy.
Again, further duties are being laid on local government. Houses are being transferred from new town corporations to local authorities and there is to be legislation to abolish tied cottages. These actions, together with those stated in other paragraphs in the Gracious Speech, show that local authorities will have yet more duties to carry out.
We must add to that the abolition of direct grant schools, the refusal of the Government to adopt the simplified town and country planning procedures set out by Mr. Dobry in his report and the tens of thousands of people who will have to be employed by local authorities as a result of the Community Land Act. Furthermore, I understand the House is to deal with a Bill from the Labour-controlled West Midlands local authority which wishes to give every conceivable retail trade and service to the local council to carry out.
The second reason for increased local government expenditure is the increase in national wage rates, and the Prime Minister did not acknowledge this in his speech. Local government is labour intensive—teachers and typists, builders and bin men, road menders and the rest. Local government expenditure is greatly affected by national wage increases which are quite out of its control.
The Prime Minister discovered two other reasons for increases in local authority expenditure. The first was expressed in this mixed metaphor:
My one criticism—and not of the party opposite in what I am about to say—is that in recent years in particular there has been in some areas of local government a big increase in the ratio between chiefs and Indians—or, perhaps better, between teeth and tail—between those engaged in administration and those at the sharp end providing help for those in need, and so on.
That is a pretty fantastic picture of a mass of chiefs with bureaucratically-bared teeth autocratically lording it over a handful of Indians with sharp-ended tails! If he really believes this, what is he going to do about it? His only suggestion to local authority representatives at Eastbourne was to create more chiefs by setting up a watchdog committee, for every council, consisting of unelected busybodies. This would be totally undemocratic and wholly impracticable. I do not know who on earth thought that one up for him. I cannot believe it was Ministers in the Department of the Environment.
More chiefs, and this time with no teeth—that has been the only suggestion to emerge since the Prime Minister's speech last Wednesday. This is the only solution offered to control local authorities in their possible overmanning at the top as against those whom the Prime Minister described as being as the sharp end.
I do not think that this overbalance is universal, but I am ready to admit that in some places there is overmanning at the top such as in some places in Yorkshire and Leicestershire. Any Government must appreciate that no one takes the trouble to stand for his local council without the determination to see that his council does a good job and provides the services for which the public ask. That is our democratic form of local government. But our current national economic circumstances impose a duty on Ministers


to curb the natural enthusiasm of local councillors.
Late in 1973 it was obvious to me in my then position as Minister for Local Government and Development that the new councils, even before they had started their work, were in many cases building empires. I set up an inquiry to look into the new establishment of local authorities and the salaries being offered. It was obvious that some authorities were poaching the staffs of others by offering attractive salaries and were building up establishments which were unnecessary for the functions being transferred to them. That report was to be put before the Pay Board, but there was a General Election before the report was made. A Labour Government took office, the Pay Board disappeared and I think that the report, too, disappeared without trace.

Mr. John Evans: Does the right hon. Gentleman accept that during the course of 1973 when the new authorities were forming upon amalgamation they were following the lines recommended by the Bains Report which he and his Government endorsed and put before the local authorities? If there are too many chiefs it is because they followed the Bains Report.

Mr. Page: I completely deny that that was the tenor of the Report. It was a very good Report which, properly followed, would have meant that the local authorities did not increase their establishments or pay the sort of salaries which some of them were doing at that time. What action do the Government intend to take now on that Report? The Prime Minister complains of the situation, but he has given no indication of the action he might take to deal with it.
There must be a partnership between central and local government, particularly in the present circumstances, in the use of total national resources. The Chancellor of the Exchequer mentioned the consultative committee. I fear that it is about as effective in bringing about this partnership as a kitten would be. We have heard not even a squeak from it. The Government should, while allowing freedom to local authorities within an overall limit, fix that limit on the total expenditure of authorities, however raised, whether through the rate support grant

or by means of the rates, but not by the rate support grant alone.
The Chancellor admitted that in the past we have failed to contain local government expenditure merely by fixing the rate support grant. If we squeeze the balloon in one place it merely bulges out elsewhere, and the local authorities collect the difference through the rates. Central Government have a right to put a strict limit on the establishment of local authorities and to be firm in negotiating wage scale rates.
Actually, the figures of local government staff might well show that the increase in employment levels is due to a significant rise in the number not of chiefs but of Indians. It is Labour policy to encourage local councils to employ more and more direct labour, not only on building, and this is where the increases are occurring at present.
One of the best ways to reduce local government expenditure is to make local councillors directors rather than operatives, and by that I mean that local government functions should be let out to private contract. House building, road making and maintenance, refuse collection and disposal, libraries, parks upkeep swimming baths, and so on should be let to outside contractors. By that means the staff of local government could be reduced substantially and the work would be done at competitive prices.

Mr. Bob Cryer: The right hon. Gentleman's suggestion is outrageous. In Keighley the house repairs contract was given out to private enterprise and it proved a total disaster. The Conservative-controlled local authority had to rescue the position by setting up its own direct works department.

Mr. Page: That is not so in other areas. I am sorry that the hon. Gentleman represents a failure in local government.
I want to turn now to the prime Prime Ministerial red herring. The right hon. Gentleman said:
But the biggest single factor in this wide area of our national life, extending from local government to water supplies and the Health Service—I say this to anyone who talks about the increase in public expenditure—is in the drastically misconceived policies which led to the reorganisation carried through in local government—duplication, double banking, a vastly increased bureaucracy, superchiefs taken


on to supervise existing chiefs, and divided responsibility."—[Official Report, 19th November 1975; Vol. 901, c. 47.]
The Prime Minister did not complain about duplication when, during the course of local government reorganisation, he led a deputation to me asking that I should divide a district which I had intended should be one, to divide St. Helens from Huyton, which is in his own area. By his reference to duplication and double banking, I assume that he means the two-tier system of local government reform. Labour Government policy at the time was set out in White Paper Cmnd. 4276 in February 1970. It was Labour policy to leave Greater London with the two-tier system, a county with 32 districts. Maud also recommended three metropolitan counties with 20 districts. The Labour Government accepted that recommendation. It did not say "This far and no further". Labour policy created two more metropolitan counties—West Yorkshire and Hampshire—with eight districts. I think that the duplication was merely in the Prime Minister's speech and not in local government reorganisation. Labour policy put half the population of the country into the two-tier system yet the right hon. Gentleman claims that the duplication and double banking have caused this great increase. He did not say that at the time.
Then Labour policy went crazy in the rest of the country. The rest of the country was to be governed by 51 unitary authorities. That would have resulted in disastrous remoteness of local government from the people and an enormous bureaucracy for these large authorities. Our reduction from 1,300 to about 300 local authorities brought them down to the right figure.
I admit there is possible overlapping in functions at present in the transitional arrangements provided for in the Act. These arrangements were to cover the situation where an authority had a good team, say in planning or in road engineering, which it would have been foolish to break up at once. There were therefore arrangements between the counties and the districts to carry out each other's functions.
These have not all proved successful and the Secretary of State has the power to remedy that. He should give careful consideration to the transitional arrange-

ments. I am not advocating a Big Brother attitude by central Government to local authorities except on these selected points. It was always intended that the Secretary of State should take another look at the transitional arrangements.
One of the main purposes of local government reorganisation was to reduce the nit-picking by Whitehall over what local authorities were doing in their town halls, particularly on individual capital projects. The desire was to reduce the number of civil servants overlording the local authorities. Indeed, we abolished many supervisory acts by central Government. Why then has the number of civil servants increased by 32,000 in one year since the Labour Government came to office? Why was the number not reduced as a result of local government reorganisation? To take the main Department concerned, why has the cost of the staff of the Department of the Environment increased by £45 million in the year that the Labour Government have been in office? That cost should have been substantially reduced by dealing with local government reorganisation as was intended.
There was nothing wrong with the policies of local government reorganisation. What has gone wrong in some respects is that the Labour Government have failed to enter into the right partnership with local authorities. The Prime Minister's disclosure of his ignorance of local government and its system since last Wednesday has served only to make matters much worse.

5.51 p.m.

Mr. A. E. P. Duffy: I am sorry that the right hon. Member for Crosby (Mr. Page) was not impressed by the speech of my right hon. Friend the Prime Minister at Eastbourne last week. I was heartened by it, seeing it as reflecting a more realistic approach to economic and financial matters.
All the proposals in the Queen's Speech, foreign as well as domestic, are based on the success of the Government's economic and financial policies. That is acknowledged explicitly in the Gracious Speech and in the necessary qualification, "within available resources", tacked on to several proposals.
The real test of the Government, and therefore the real political battle, will not


come from anything specifically in the Gracious Speech. They will arise from the Government's management of the economy between now and next summer. None of us can be in any doubt about the Government's prime economic objectives. They are: first, ensuring recovery in industrial activity and investment, and thus limiting the rise in unemployment; secondly, bringing about an improvement in the balance of payments; and, at the same time, thirdly, establishing a permanently lower level of inflation. But those objectives will not be achieved unless certain preconditions are met.
For example, the Government must set about strategy-making in the right way. The recently-announced policy following the Chequers conference, of diverting resources to the most promising sectors, suggests that Government economic policy is at long last swinging round in the right direction.
The Government must follow that strategy and cling to it. They perhaps have only just enough time to do so between now and the next General Election. What will impress public opinion is the Government's ability to carry through a coherent economic strategy in the face of all temptations to bow to sectional pressure of one sort or another. Otherwise, the necessary changes to reverse our long-term industrial decline cannot begin.
There is no virtue in going on producing goods for which there is a declining market, or perhaps no market at all. I have the utmost sympathy for those who become unemployed, but goods must sell. Economic well-being lies in producing goods and services that people want and will pay for. Thus, the strengthening of the country's industrial base must take priority over all other aims.
That calls for investment, as we hear on all sides. I was glad to hear from my right hon. Friend the Chancellor of the Exchequer this afternoon that what is needed is not necessarily a greater volume of investment but, as recent research suggests, a change in its direction. Investment implies a higher level of profitability in both the private and public sectors. None of us on the Government Benches need shrink from that, although I think that profitability is a misleading

word. Rather, we should talk of internally-generated cash flow. I know that that sounds forbidding, because it is a technical expression, but it is perfectly understood by those trade union representatives who will negotiate only when there is money on the table. I want to see all trade unionists understand it and look for it in their firms. I want them to think more and more in money terms, to want to see as much of it as possible generated by themselves and their firms, and to ask questions, preferably the right questions, when it is not. Without internally-generated cash flow, no business can grow.
It will not be enough to pursue the various objectives of Government economic policy by themselves. They must be reconciled. That will be very difficult. For example, none of us should minimise the complex dilemma which faces the Government when jobs are threatened. It is too easy in a debate of this kind to gloss over the fears and the sheer human misery caused by unemployment. I suspect that tens of thousands of workers are scared stiff of losing their jobs. I hope that we are all fully sensitive to those fears.
Presumably the IMF loan is intended, in addition to the explanation offered by my right hon. Friend the Chancellor, to reconcile the limited rise in unemployment with the limited improvement in the balance of payments until the Government feel that they can hold public and private consumption to a level within our means. But, live within our means we must, and preferably at the earliest possible date. That is an argument that no one understands more readily than a working-class household, because every head of a working-class household has been brought up in the belief that above all one lives within one's means, and one has nothing but contempt for other families that do not.
That is not the only argument. If we do not live within our means our problems will only multiply—not least unemployment, contrary to what I suspect some people believe. Further public expenditure increases will not reduce unemployment but increase it.
Therefore, as my right hon. Friend acknowledged this afternoon, the Government are bound to give the highest


priority to bringing their own expenditure under control. My right hon. Friend said a week or so ago that Government borrowing was now running at about 20p in the pound. The public sector borrowing requirement is consequently running at a level that I cannot bring myself to quantify and my right hon. Friend cannot bring himself to reveal. When Parliament is confronted next month with the figures in the public expenditure White Paper and the consequences, we shall all be well aware of the country's predicament. If we have to have resort once again to the IMF, it will be on quite different terms to those for the recent loan. No hon. Member will resent those terms more than I and my hon. Friends shall. That is why I want to avoid that situation.
However, the axe should not be swung indiscriminately. Public expenditure cuts should be undertaken only with the greatest care and selectivity. Personal services rather than productive skills should be a target. Our burgeoning bureaucracy has been nominated as a target by my right hon. Friend the Prime Minister.
Cuts in defence contracts in the aerospace industry are to be avoided. I am mindful of an article in the Financial Times on 17th November this year by Michael Donne, its aerospace correspondent, who stressed the value of our aerospace industry to the country as a whole, to our balance of payments situation, and also in terms of the employment created by that industry. Mr. Donne went on to justify the claims of the aerospace industry with its exceptionally high conversion ratio, and wrote of the industry:
Every poundsworth of raw materials it imports is turned by engineering skills into aircraft, engines and other products worth up to 26 times more, while maintaining employment of over 200,000 workers.
Therefore, we should be extremely careful not to make men with such skills redundant.
Similarly the temptation to impose temporary import restrictions might be regretted by the Government. Such a policy is bound adversely to affect the domestic price level and will run counter to the Government's policy on inflation. Action on these lines is sure to bring retaliation and a queue at the door of the Department of my right hon. Friend the Secre-

tary of State for Trade. There will be scarcely a Member of this House who will not wish to take refuge under the protective cloak of any restrictions in respect of any local industry that finds itself in trouble. I have already hinted as much to the Secretary of State for Trade. I informed him that recently I saw a deputation on behalf of Sheffield's special steels. That delegation feared loss of jobs because of competition from the dumping of cheap Japanese steel. We are well aware of the difficulty of trying to limit the number of "special cases".
Perhaps the highest priority this Session should be awarded not to legislation, or even to any proposal in the Queen's Speech—apart from the important paragraph on economic policy—but to the education of parliamentary opinion in the realities of our economic problems. Members of Parliament need to be given a much deeper understanding of the realities of our economic situation. Without that knowledge, as I know all too well from recent personal experience, we are unlikely to have an honest debate of our real problems and there will be an unwillingness to utter or indeed to accept uncomfortable truths.
I have no doubt that hon. Members are lagging behind the public at present. Ordinary people know that it is no use arguing about the distribution of wealth until we find more effective ways of creating it. The mood of the nation is now very different from the mood only two years ago. People are very worried indeed about unemployment and also about inflation, especially the latter. Yet although the political, social and economic problems faced by the Government are menacing and seemingly intractable, they can be transformed by a modest economic recovery.
Therefore, that is the key to the situation. The Government may have a modest parliamentary majority, but they govern an orderly country which, though weak, is still relatively prosperous. If only Britain can be kept from dissolution and persists with its more relevant and realistic economic policies, a harsh winter may yet give way to a more hopeful future.

6.4 p.m.

Mr. John Pardoe: I shall not follow the tenor of the speech


of the hon. Member for Sheffield, Attercliffe (Mr. Duffy) because I wish to move an amendment that stands on the Order Paper in the names of my right hon. Friend and other Liberal Members—

Mr. Deputy Speaker: Order. The hon. Gentleman knows that he cannot move an amendment now. The opportunity for him to do so will come later in the proceedings.

Mr. Pardoe: It is most important that I get the message across to the House that we intend to move the amendment at a later stage, otherwise it might be left out of consideration. It is gratifying to know that the procedures of the House have now been changed to enable us to move a second amendment, as we intend to move it in due course.
I wish to direct attention to our amendment, which deals with the Dock Labour Scheme. I am glad to see in his place the right hon. Gentleman the Secretary of State for Employment since I wish to say a few words about the scheme. I do not wish to debate the subject by the use of political slogans. I can appreciate that there might be some advantages in extending the scheme to non-scheme ports, but the advantages have to be stated and proved.
There is a commitment in the Queen's Speech to extend the Dock Labour Scheme to non-scheme ports and places of work that are not even ports at all. So far we have had no indication why the Government believe that these advantages exist. The facts appear to boil down to two only. The first is the fact that freight traffic in those ports covered by the scheme has been falling. Those ports have lost out from competition by foreign ports and also in competition with non-scheme ports. Secondly, productivity in ports covered by the scheme is low—very much lower than in most European ports with which we are competing and certainly not as high as in non-scheme ports.
This does not necessarily point to the failure of the whole scheme, but it is obvious that the Government must answer these points and come forward with other positive advantages that may show why we are being asked to extend the scheme to non-scheme ports.
The second part of the proposal is infinitely worse. It seeks to pretend that something is a port when manifestly it is not. It must be obvious to any reasonable person that a port requires some kind of access to water. The Secretary of State for Employment is a lover of the English language and he will understand my meaning when I say that this is indulging in Orwellian fantasy.
The proposal arises out of the 1972 dock strike when the dockers claimed the right to jobs in the new cold stores and container bases.

Mr. Eddie Loyden: The hon. Gentleman so far has displayed unparalleled ignorance about the dock industry, and particularly the history of the container bases. He has not attempted to analyse the situation in the dock industry that prevailed before any scheme came into existence. He has failed to inform the House—

Mr. Deputy Speaker: Order. I must remind the hon. Member that there is great competition among hon. Members to speak in this debate. He must not make an intervention of that length.

Mr. Pardoe: I thought the hon. Gentleman would realise that in view of the indication given by Mr. Speaker at the outset of the debate, I am trying to compress my remarks on this subject. Although I should be most happy to go into the whole history of the dock scheme and to debate the matter with the hon. Gentleman all day and all night if he wishes, I do not now intend to take up the time of the House in doing so.
I was saying that the proposals arise out of the 1972 dock strike. The hon. Member for Liverpool, Garston (Mr. Loyden) might not agree with that statement, but the dockers claimed the right to jobs in the new cold stores and container bases. That may have been a reasonable course for the dockers to take because they saw warehouses, container bases and cold stores being set up on the very edge of areas in which they had been working. Understandably those dockers felt them to be an extension of the port in which they worked and claimed a right to a job when work in the ports was declining. But it is a different matter when the Government now step in and seek to claim that any warehouse,


cold store or container base five miles from any port or navigable waters is to be regarded as a port. It is a most extraordinary proposition to be put forward by the Secretary of State for Employment.
In 1972 a compromise was reached at the cost of £30 million of public money. I repeat that we paid £30 million in good faith under the leadership of the then Conservative Government as a result of a compromise solution between Lord Aldington and Mr. Jack Jones. We thought that we had met the dockers' demands, and indeed I am sure that most people in the country thought that to be the case. Probably they thought that the £30 million was well spent. Now we find that that money did not buy off that demand. Apparently the money was entirely wasted. The demand remains. The dockers still want those jobs and presumably they want to keep the £30 million. I should like to hear what the Secretary of State will do to get the money back. Apparently the Government intend to surrender.
We can afford to take a humane attitude.

Mr. Kevin McNamara: rose—

Mr. Pardoe: I shall not give way. Mr. Speaker asked for short speeches. He specifically warned at the outset against interventions and giving way.
Whatever the economic problems of this country, we can afford to be humane and generous to men and women who are employed in what is inevitably a declining industry. It is the kind of industry to which the hon. Member for Sheffield, Attercliffe referred. We can afford to compensate those workers for the loss of their jobs and to pour large sums of money into retraining them for new kinds of jobs. I even agree—some members of the Conservative Party would not agree—that the Government can put money legitimately into the creation of new jobs to replace the jobs lost in the declining industries. We should take those steps which will lead to a more efficient and humane society.
We cannot afford to guarantee to every man and woman in this country that they can stay in their present jobs for the rest of their lives. That way lies economic degradation and desolation. That is what

the Secretary of State is proposing to do. We shall be faced, as will any industrial society, with a series of such situations. We must prepare for future shock. People will not like the pace of change that will affect their lives over the next 15 to 20 years. However, change must occur in this country: and faster than in many other countries.
I would have thought that the Secretary of State at some stage in his career was a radical; and that he would then have said that change was his ally. In fact he stands shouting and proclaiming to all the world the words of the title of Anthony Newley's musical show
Stop the world, I want to get off".
The right hon. Gentleman cannot face the problems of change; he cannot face the problems of future shock.

The Secretary of State for Employment (Mr. Michael Foot): I intervene as this is an important matter. It is right that this important proposal in the Government's programme should be discussed in the House of Commons. Indeed, the Government decided that the matter must be brought to the House of Commons instead of being dealt with under the inquiry system which was set up under the 1947 Act. Therefore, I do not complain about the matter being discussed here. We shall produce our proposals with the Bill, which can be discussed in detail.
However, the hon. Gentleman would be well advised to contain his criticisms until he has seen our proposals. That is the great danger in the course which the Liberal Party appear to be embarked upon in the proposed vote on this matter, if that is what they intend to do tonight.
Some of us have visited the docks in Liverpool, London and elsewhere. We say this to the dockers: we think it is right that the difficult question of the docks should be settled by Parliament and by legislation. The Advisory, Conciliation and Arbitration Service, which helped to end the appalling dock strike in London a few months ago, recommended early legislation. That is what we propose to do. We appeal to the dockers to respect Parliament and to agree that Parliament should settle the matter. If the Liberal Party now opposes the introduction of a measure into the House of Commons to deal with the


matter, that is inviting trouble of a different character. I invite Liberal Members to reserve the question whether they will vote on this matter until they have heard the proposals.

Mr. Pardoe: The right hon. Gentleman is wrong. He made a long intervention. I understand his wish to answer the point I made. I am grateful to him for attending this debate. However, I hope that the time taken by that intervention will not be deducted from my entitlement.
It is all very well to say that the Government will introduce the legislation proposed in the Queen's Speech but that we must not discuss it this afternoon—indeed that we must postpone our discussion until the whole matter is debated, when a fait accompli, a printed Bill, is placed in front of us. That is not parliamentary democracy.
The House knew the issues involved before the right hon. Gentleman rose to the Dispatch Box. The right hon. Gentleman appears to have forgotten some of the lessons in parliamentary democracy which I thought he learned under the mantle of Aneurin Bevan in his constituency.

Mr. Foot: I suggest that before Liberal Members vote on the proposals they should know what the proposals are.

Mr. Pardoe: The general outline of what the Government propose is clear. Will the Secretary of State say that he is not proposing to extend the Dock Labour Scheme to non-dock-labour-scheme ports, or that he is not proposing to extend it to inland warehouses? No. We know what the general outlines of the scheme are. It is all very well for the right hon. Gentleman to say that he and some of his colleagues have traipsed up and down the country talking to dock workers, but has he spoken to the warehousemen and to the people whose jobs he will take away? Has he spoken to the workers in the cold stores? He should visit some of the cold stores and face the music. He should speak to them.

Mr. Cyril Smith: They are just as good members of the Transport and General Workers' Union as are the dockers.

Mr. Pardoe: The first effect of this scheme will be the creation of a monopoly situation. Only registered dockers will be able to handle the work in all our ports. That will create an inevitable potential for disruption in the train of monopoly. That is the first principle which we oppose.
The Secretary of State should see what effect this scheme will have on the prices of imported food. Will the Government say "This is having a disastrous effect on our pay policies. The trade unions will not accept the £6 limit because our Dock Labour Scheme has put up the cost of imported food. Therefore we must ask the Treasury for more money for subsidies with which to hold down the price of food."
The Government are putting forward an extremely conservative solution. They have already indicated that the registered dockers will virtually be guaranteed jobs for their lifetime regardless of the work situation in the ports. The hon. Member for Attercliffe drew attention to the problem of shoring up industries where change is required. We cannot continue to do that. We must find other ways which do not include a guarantee of a job for life.
Has the Secretary of State visited the small ports? Has he talked to many of the dockers in those small ports which are not part of the scheme but which will become so? They do not want the scheme to be extended to their operations. They are not crying out for it either through their trade union structure or through their Members of Parliament.
It is legitimate for the House to consider this important matter in this final debate on the Queen's Speech. This is an appropriate moment to do so. It is time that the House fired a shot across the bows of the Government's scheme long before it receives every full stop and comma, or crossed T and dotted I, long before all the details are filled in.

Mr. Cyril Smith: Is my hon. Friend the Member for Cornwall, North (Mr. Pardoe) aware of the fact—as the Minister certainly is, as I wrote to him on this matter a month ago—that I met in the House of Commons 34 shop stewards, including three branch secretaries, all of them members of the Transport and General Workers' Union, and the General and Municipal Workers'


Union, from the perimeter area of the Port of London, who are totally opposed to the Government's plans for the extension of the dock labour scheme? Those people told me that they represented 15,000 members of trade unions who were opposed to the Government's scheme. I asked the Secretary of State whether he was prepared to meet a deputation from those trade unions—

Mr. Deputy Speaker: Order. I am almost forgetting who is addressing the House. Mr. Pardoe.

Mr. Pardoe: I am grateful for my hon. Friend's intervention, which bears out my point that while the right hon. Gentleman may be concerned to secure the jobs of certain people he is supporting he has entirely neglected the jobs of those who work in warehouses and cold stores—the jobs which the dockers will take over. What will the right hon. Gentleman do when these workers knock on his door? I know what he will do. He will do what he has already done. Presumably he will draw another line, an inner circle, another five miles inland. He will say that all the workers in the warehouses and cold stores within that five-mile limit can have the jobs within that inner limit. Sooner or later he will get to the centre of Britain and will be unable to go any further!
I make no apologies to the right hon. Gentleman for raising this matter at this time. The cacophony it has raised on the Labour Benches shows that Labour Members are extremely anxious about the opposition to the scheme which stems from many of their own supporters. The Liberal Party intends to speak out about the people whose jobs are being endangered by the right hon. Gentleman even though the Labour Party has forgotten where its duty to them lies.
I wish to speak briefly on the economic debate and to answer the arguments put forward by the Chancellor of the Exchequer. In a typically bombastic outburst at the end of his speech he said that the Liberals would indulge in a terrible alliance by supporting the Opposition motion. He is right in that we shall support the Opposition motion, and we hope that the Conservative Opposition will support our motion as a quid pro quo, but that is not an alliance. If it so happens that we are

allied in believing that the proposals contained in the Queen's Speech are less than are required, either for the present or for the future, so be it, but we are certainly not allied in believing that the Conservative Party has any better answers to these problems than has the Labour Party. It clearly has not.
In the general economic discussion on the opening day of our debate on the Queen's Speech two points emerge from the speeches made by the Prime Minister and the Leader of the Opposition. Each side seems to be saying that what it has done is a little less awful than what the other side did last time. The Conservative Party has a new twist. It seems to be saying that what it will do next time is a little less awful than what it did last time. That prospect does not thrill me with confidence for the future.
The second point which emerges is the pretence that our economic problems are the same as or no worse than those of other countries and stem entirely from what the other side did last year, last week or last month. Nothing could do greater disservice to the country than to pretend that what is happening to the British economy is due to what was done by the previous Conservative Government or what this Government are doing. All right, of course there are short-term effects but this country of ours is in fundamental long-term decline, and the trifling remedies proposed in the Queen's Speech will not help matters.
Before the Chancellor congratulates himself on the success of his pay policy he might at least have the good grace to admit that in the last two General Election campaigns he told the nation and everyone who would listen that no pay policy could work. The Liberals were going round the country saying that the nation needed a pay policy. We told him that he would have to have one. Now he has one, and he claims credit for its success. I am glad that it has succeeded, and I say only that I told him that it would. Had he listened to me and my colleagues he might have achieved a better pay policy.
Now that will have to come in August. According to the Prime Minister, the Chancellor is responsible for the extension of the pay policy in August, when the present pay policy ends. The country cannot afford £6 per week from August


1976 to July 1977. Someone will have to shoulder the burden of telling the nation that. It is time we started preparing our fellow countrymen for the shock of that realisation.
I do not believe that the measures that have been proposed either on the incomes policy and its continuation or on cuts in public expenditure will solve the fundamental long-term problems of the British economy. The only thing that will solve that is a new political settlement. From the evidence which the House has received in Select Committees, particularly on the regional development schemes, and the evidence which emerged from a recent report published by the National Economic Development Office about the major constraints that existed up to 1973 on manufacturing investment in Britain, it can be seen that the reasons given for the lack of investment by industrialists are not economic, not industrial and not financial. A survey was conducted by the National Economic Development Office into industrial attitudes in the manufacturing sector. The survey tried to find out why companies had not invested in the years up to 1973.
The conclusion of the report on that survey for the larger companies reads as follows:
In general, companies did not see themselves as having been constrained, in their investment, by lack or cost of finance.… The availability or cost of finance was not a significant contraint for most companies prior to 1973.… Clearly factors such as uncertainty about continuity of Government economic policies applied to a considerable extent throughout the 1960s and the early 1970s.
Coming to the smaller companies the conclusion was as follows:
The comparatively low level of investment of small companies since the mid-1960s has not been caused by a shortage of funds. Instead, the prime constraining factors for these smaller companies seem to have been; a lack of confidence in the consistency of Government economic policies.
That is the issue which we all have to face. We have to find a solution to that problem. British industry will never regain the confidence it needs under either Government until we have abolished a political settlement which constantly works against stability, consistency and continuity.
I end by quoting some words which I hope will strike a chord in the hearts of

some Conservative Members at least. They come from a pamphlet published recently by an ex-Conservative Member of Parliament, a much respected lawyer and an ex-Minister—Sir John Foster. He said:
Britain, the country with the most primitive electoral system"—
[Interruption.] Hon. Gentlemen must listen to an argument even if they do not agree with it. Sir John Foster said:
Britain, the country with the most primitive electoral system is also the country suffering the greatest economic problems in the industrialised West. The link is clear for all to see. That clear and unhappy link makes electoral reform an essential element in the regeneration of Britain".
That and a new political settlement are the only way to solve this country's long-term economic decline.

6.28 p.m.

Mr. Norman Atkinson: I hope that the House will forgive me if I do not go into the depths of Liberal philosophy. I look forward to the time when my colleagues from the dock areas are able to participate in the debate and put the record right. None of my hon. Friends, apart from Ministers, has a clear idea of the proposals, so I do not see how we can discuss them in advance of the announcement that is to come. I have read the document but the Government still have to make their decision and their announcement. I have a suspicion that this will be the last of the experimental intrusions. Other recommendations will be made to Mr. Speaker after our experience this afternoon.
During my intervention when my right hon. Friend the Chancellor of the Exchequer was speaking I mentioned the borrowing requirement when I should have been talking about the Government deficit. I wish to put that right to avoid confusion. I was then arguing that the Government should not be embarrassed in any way by the 6·5 per cent. figure—if that is what it ultimately is as a proportion of the gross national product. That is a very different thing, of course, from the borrowing requirement.
The amendment standing in my name and the names of some of my hon. Friends is not, unfortunately, to be called. It sets out succinctly and powerfully the alternative case and alternative policy which we believe the Government


should now be pursuing to put right the problems from which the people Labour Members represent are suffering. By the amendment we direct the attention of the House to our argument for an immediate reflation of the economy, but we have taken a great deal of trouble to qualify that blunt statement, recognising all the problems inherent within our system and that there are major difficulties in terms of immediate reflation. Our case is based on the necessity for the Government to control our imports and external trade and, as the amendment says, to re-define the criteria of price control regulations.
We believe that these things are essential to our case because we recognise that by immediate reflation it is possible to worsen the situation and to make money supply difficulties even greater in certain circumstances. It is possible to defeat the Government's policy of bringing down the rate of inflation to single figures by this time next year—a policy to which we subscribe totally—and we do not wish in any way to inhibit that policy. We must find ways of modifying the system to prevent the conversion of reflation into either a higher date of price inflation, or a sucking in of additional imports, which the country cannot stand in the present situation.
We therefore qualify our argument by saying that some modification in the system must take place if we are to implement the conditions that we lay down. We think that that is a total and convincing argument for taking the steps now necessary to reflate the economy and to reduce the level of unemployment. In the amendment we also mention the £6 a week agreement. We do so because we believe that following next August we shall argue the case for the return of free collective bargaining but set against new price criteria. We believe that in that situation it is much more necessary that ever to start free wage bargaining against price maxima. Therefore, we have tried to set out our case in that regard.
We also recognise that the amendment is in no way inhibited by our membership of the European Economic Community, or by the recent IMF loan, or by the terms of our membership of GATT. The Government use these reasons for not accepting the terms we have set out in the amendment calling for the imme-

reflation of the economy. The right hon. and learned Member for Surrey, East (Sir G. Howe) said that we were to have a longer haul than months and that substantial cuts were inevitable. He spoke of cuts in the social services and Government expenditure generally. He reiterated that there would be cuts in living standards as a result of decisions already taken by the Government.
I do not know whether my right hon. Friend the Chancellor of the Exchequer had some problems with his collar, but he seemed to be nodding his head. He did not intervene. He did not object to what the right hon. and learned Gentleman was saying. I am sorry that he is not here, because otherwise we could discuss the matter and get a clear understanding from him of the Government's intention.
It is a very serious business indeed, and one of some sadness to the whole of the Labour movement, if the leadership is now saying that the movement has no answers to the unemployment problem and no policy to remedy this situation. If the leadership is saying that we are in a very serious situation, that is an immense challenge to the organised workers.
My right hon. Friend the Chancellor of the Exchequer at least seemed to confirm the suspicions of many of us by saying that now was not the time to reflate the economy. By hints and suggestions he has said what he has said before—that the Government could not intervene in the sense of reflating the economy until such time as the rate of price inflation was down to single figures, on the assumption that this would be by this time next year or later. My right hon. Friend the Foreign Secretary recently said that this would possibly be a much longer period than the Government expected three or four months ago. If that is so we could be well into 1977 before the Government start to take the necessary initiatives that will not only arrest the rise in unemployment, but do something positive about implementing remedial measures to bring it down.
That is an intolerable situation. The TUC, the General Council, and most of my hon. Friends would not go along with such a policy. I think that there is unanimity about the view that we could not possibly survive politically if we tried to ride out this typhoon in that way.
I remember my right hon. Friend the Secretary of State for Employment saying we had to batten down the hatches, face the problems head on and ride through the storm. If that is to take us on to 1977, certainly the crew will not be going through the storm in that fashion. There will be storms of a different kind altogether. The Labour movement will be faced with self-destruction long before we get to that stage unless the Government intensify the measures necessary to put matters right.
I see that my right hon. Friend the Chancellor of the Exchequer has now returned. He referred in his speech to the 1,200,000 unemployed, recognising that the figure was likely to increase to over 1,500,000.

Mr. Healey: I am afraid that my hon. Friend is once again totally misrepresenting what I said. I said nothing about the figures rising to 1,500,000. I said that the rate of increase had been declining in recent months, but that there would be some increase in the early months of next year.

Mr. Atkinson: I certainly do not want to misquote my right hon. Friend. I have never done so before. I have been most precise in referring to whatever statements he has made. I have no desire to do him an injustice, but let us look very clearly at what has been said. We are faced with an extremely serious situation. I hope that my right hon. Friend understands that. We are not nit-picking at all. These are major issues and so we have to get them right.
Am I to take it that the Chancellor of the Exchequer has said this afternoon that the British Labour movement does not know the answer to this situation and that we cannot start the reflationary process long before the figures rise well above the 1,200,000 unemployed workers mentioned by my right hon. Friend? Is it being said that we cannot take immediate steps to reflate the economy? If that is the situation, our credibility has gone. Our credibility has gone if we are to tell workers that we are sorry but we cannot solve the problem of unemployment in this country before other things happen.
If that is what is being said, it is very different from 12 months ago when the

Chancellor of the Exchequer said at the Labour Party conference that he was not there to preside over rising unemployment, over massive unemployment, and that it was not the function of the Labour movement to use unemployment as an economic regulator. If we are now to use unemployed people as a means of decelerating the rise in inflation, so that we are down to single figures by this time next year, that is a very serious situation.
Is the message to go out to our movement that, after all we have said for 30 years, after claiming that we understand clearly the remedial measures necessary in a situation like this, we are now completely bankrupt of initiatives, so that we have to ride through the storm, batten down the hatches, make the best way we can, and hope that we can arrive in 1977 intact as a political movement? I do not think that it is on. I do not think that we can possibly do that. I do not think that we can maintain the unity of the Labour movement over that period with the pressure that such a policy is bound to create for those who represent organised workers in this country. Therefore, I hope that we shall have some very serious discussion about the situation now facing us.
I do not think that our industrial strategy was adequately debated on Thursday. I take it, by the way, that the Treasury has won, in the sense that we are to have the publication of the document on public expenditure before we get the Government's statement on industrial strategy—in other words, that the document intended to fix the guidelines is to come first and then the industrial strategy, which presumably will be manœuvred to fit the guidelines laid down in the earlier White Paper. I hope that that situation will be reversed so that we can really talk about the regeneration of British industry.

Mr. John Watkinson: I have been following my hon. Friend's argument closely. He seems to be arguing for increased consumption, increased public expenditure and increased investment. Given that the economy is not growing at the present time, how does he intend to finance all these at once?

Mr. Atkinson: I was talking not about increased consumption but about
increased capital investment. I was talking about maintaining living standards,. not increasing them. I do not think that anyone on this side of the House would consistently argue the case for increasing living standards at the moment. I do not believe that we can consume more in this situation, but I do not accept that of necessity we must consume less. That is why we have drafted the amendment as we have.
One of the tragedies of our post-war experience has been the price we have had to pay for the behaviour and performance of the City of London and the influence it has had on the British economy. The fact that the City has made a tremendous contribution in making up the deficit that has always existed in visible trade has put us at the mercy of the very criteria that have been constantly accepted and used by the City. When the City has allocated resources, it has been against our interests, but we have always been in that inescapable dilemma, because our invisible earnings have made up the deficit on our visible account. We have always been at the mercy, therefore, of methods and techniques quite contrary to our own needs as a Labour movement.
This is the price that we have paid over the post-war years for the dominance of the City's monetary policies. This is why we have consistently argued that we must try to get our visible trade balance right. We have to get our manufacturing right so that we can escape from the clutches of the City and the disastrous consequence it has had for us over the years, with all the implications of international borrowing and the effect that has had on our economy. These are the reasons for our placing so much emphasis on getting the manufacturing sector right.
I should like briefly to mention import controls, which are central to our thesis and to every aspect of the argument. Some people say that we cannot use import control in any way because it is a protective device and against the interests of world trade.
The Third World comes into this argument. It is in no way a benefit to Indian workers for us to import goods which have been manufactured in the conditions prevailing there. There is a lot more that could be said about aid programmes.

The problems of some of these countries could be solved by a very different sort of aid programme if it ran alongside a policy of planned imports on our part, rather than the importing of cheap products made in very bad conditions of exploitation.
It is not always in the interests of workers in the Third World for the developed countries to import unlimited quantities of cheap goods. We know that in some of the under-developed areas of the world there are places like Hong Kong or countries like Taiwan which are highly capitalised in the manufacture of large quantities of cheap goods. But that is another aspect.
The only way in which a modern industrial country can retaliate against import controls is by itself introducing import controls, by itself introducing planning into its external trade. There is no other way in which it can retaliate in a market economy, whether we are speaking of West Germany, the United States, or any country of the EEC.
Such countries can retaliate only by adopting the same policies as ourselves, and in combination this is an instrument for the growth of world trade.
Even if the retaliation were purely destructive, it would be in the interests of British external trade, because it so happens that we have a massive deficit not only with the EEC, but with the United States, West Germany and Japan. That being so, retaliation—even in the crudest sense—must be to the good of world trade if our deficit is causing us to use these deflationary policies and to cut back the growth of our trade generally.
The arguments against import controls do not wash. They are not constructive arguments at all. Let me suggest one or two more seductive arguments about import planning, which is what we mean when we talk about imports.
If Richard Marsh, the Chairman of British Rail, said suddenly that British Railways would be going German tomorrow and that all our engines and rolling stock would come from Germany, there would be uproar here and so many Early Day Motions that it would be impossible to see daylight on the Order Paper. But if Arnold Weinstock of GEC decided to go German for certain machinery and if a number of other


major British companies went German, there would be no notices of motion on the Order Paper. No one would object. But why is it good for Dick Marsh to say "British engines" but not for others to say "British engines" in their planning? Why is there this difference between the private and the public sectors?
I remind the House that it was the Government who took the biggest-ever import control decision when they decided to go British and to have only British-built nuclear power stations. We turned down American nuclear power. That was the biggest-ever import control imposed anywhere in the world. It was a massive decision to build British power stations. We did it in the interests of our nuclear technology and in our manufacturing interests.
The reason why Dick Marsh and others are applauded for refusing to go German is that it makes good planning sense and is good for British industry. In the same way, in every other sector there should be planning agreements giving our people a chance, whether they be in machine tools, the ferrous foundry industry, or wherever. We should say to them "You can have a long, uninterrupted run with no pressure from the world." Let us plan our own store to put right our manufacturing problems. If that is the key to our difficulties, we should have the guts to take these planning decisions.
In getting out of the situation, in reflating the economy, in doing something about reducing the level of unemployment and in doing something about putting right the problems of the private sector about which we have known for years, I hope that we can depend on the Labour Government. Capitalism and the free market economy can never solve these problems. Therefore, we depend on the Government to intervene in the ways that we suggest in our amendment. By this means, we believe that the British Government and the Labour movement can survive.

6.53 p.m.

Mr. William Clark: I hesitate to interfere in the internal wranglings of the Labour Party about the economic situation.
After the Chequers meeting, most people thought that the Government were at last seeing a little sense. Not to put it too highly, the message coming from Chequers was encouraging. Now we have the Gracious Speech, and we have to ask ourselves whether it carries out the spirit of the Chequers report, or whether it helps the country's economic situation.
If nothing else, the House welcomes the conversion of the Chancellor of the Exchequer to the view that there is something in profits and that it is economic madness to try to tax people out of existence. We also welcome the right hon. Gentleman's comment that it is impossible at the moment to reflate, irrespective of what the Tribune Group says, and impossible to confiscate the income of anyone earning more than £6,000 a year, which would be only a "one off" job and produce £450 million.
But we should look at the present scene as the backcloth to the Queen's Speech. We have a record number of bankruptcies. We have record high unemployment, with the possibility, as the hon. Member for Cornwall, North (Mr. Pardoe) said, that it will increase when the £6 limit comes in, since there are many firms in the private sector which cannot afford £6 a week across the board.
There is a lack of cash flow in many companies. That does not apply to the public sector as much as we should wish, but it does apply to the private sector. We have dividend limitation, rigid price controls, ever-increasing taxation and the attack over the past 15 or 20 months on initiative. That is the backcloth to any view that we may take of the Gracious Speech.
It is a speech which offers more nationalisation and more monopolies. I do not think that anyone would be against nationalisation if it could be proved that it would give consumers lower prices. However, no one in his senses would advocate that nationalisation has reduced any price. In fact, the reverse has happened. Nationalisation is not a panacea. It is all very well for Government supporters to say, "Hear, hear" when they hear talk of nationalisation. The general public want no more nationalisation.
To their credit, Labour Governments have always spoken up against monopolies, and they have been right to do so. But in the Gracious Speech they are proposing to create two more monopolies, one with regard to the Press, and the other in terms of the Dock Labour Scheme. I agree with much of what the hon. Member for Cornwall, North said about this. I applaud his ingenuity in starting his remarks on dock labour, mentioning in passing the economy, and ending up with a rousing speech on proportional representation. In any event, with the Dock Labour Scheme a monopoly is being created.
From an economic point of view I can see no incentive in the Gracious Speech to the private sector. The reverse is in fact true. But whether Government supporters like it or not, the private sector produces 97 per cent. of our exports, and it is on our exports that we live. It is on exports that the standard of living of every working man and woman depends, and 97 per cent. come from the private sector. The Gracious Speech does precisely nothing for the private sector, and the only conclusion about it that we can reach is that it is irrelevant, irresponsible and divisive.
The country needs more incentives, and they are long overdue. The capitalist system is vilified and castigated by Government supporters for not investing. But what incentive is there for the private sector to invest—and I repeat that it produces 97 per cent. of our exports? Investment will come not, as the Chancellor said, from increased productivity. Investment will come only from profitability. That is the key to investment, and we shall not get investment if we have price control and limitations on dividends and profitability. If we want investment, there is no point in offering the industrialist only doctrinaire Socialism based on the lowest common denominator.
In the Gracious Speech, what has a certain influence on the economy is the question of choice. If the Government of the day control investment, dividends, prices and the rest and they go on to control choice, whether it be in terms of pay beds or education, psychologically this has an effect on our investment potential. I cannot understand why the

Labour Government, the Labour Party and particularly the Tribune Group, which always claims to look after the underdog, should not say to a taxpayer "Whatever you earn, at the end of the week you will pay your tax, your PAYE, and your national insurance contribution and whatever you have left, albeit a small amount, you have the freedom to spend as you wish." No Government have the right to say whether a man should spend his net income on bingo or BUPA.

Mr. George Cunningham: The hon. Gentleman speaks as though business men in this country are bursting with efficiency and enterprise and are being frustrated only by the activities of the Government. Does he not think that we might suffer even more from our business men than from the Government over the years?

Mr. Clark: I am delighted that the hon. Gentleman realises what I have been saying. The business man in this country is a good business man. He is prepared to invest, he is able to manufacture and, despite castigations about the City, he can produce the invisibles on which our standard of living depends. If the hon. Gentleman wants a clear answer, the business man is being hamstrung by this Government because of restrictions and controls.
The Government pay lip service to a mixed economy. It appeared that in his speech the Chancellor was coming round to the idea that possibly the public sector was large enough. However, I believe that the Government merely pay lip service to a mixed economy, because year after year, whenever we have a Labour Government, we have more State control.
Can the Government's policy succeed? It is obvious that we shall have more civil servants and more bureaucracy. There is the continuous cosseting of State enterprises and less understanding on the Government Back Benches of the profit motive. The profit motive applies not only to business, but to every person in this country, whether he be in business or selling his labour. The profit motive should be encouraged. More help should be given to the private sector. Again I ask whether the Government's policy can succeed. I should think the answer is anything but satisfactory.
One matter has been slightly glossed over. When comparing our borrowing requirements and overspending with other countries, the Chancellor glossed over the fact that our rate of inflation is higher than that of other countries. The frightening thing is that our borrowing requirement—the Chancellor has not denied this; in fact, he tacitly agreed—is about £12,000 million per year. That is £1,000 million per month.
We have been to the IMF and borrowed one month's money. The next time we go to borrow another month's money presumably the IMF will want to look at the books. Following the arithmetic through, £1,000 million a month means that we are overspending by £230 million a week, or £33 million per day. Hon. Gentlemen opposite should not shake their heads. That is the arithmetic. I have had it checked. We are overspending to the extent of £1·4 million per hour. That works out at £23,000 per minute, and each second we are overspending to the extent of £380. We cannot laugh that off. That is a frightening amount to have to borrow.
One thing which worries me and some of my hon. Friends and many industrialists and others is that unless we grasp hold of the nettle of doing unpopular things and telling the public, as one Minister did, that the party is over, we shall run ourselves into economic chaos. The only party that thrives and prospers on economic chaos is the Communist Party. Some members of the Government who would like to see the demise of the capitalist system are on record as having said so. We do not think that it would be right for the capitalist system to be buried. But some hon. Members opposite—in fact, some members of the Government—are absolutely determined on their records to get rid of the capitalist system. It is essential that all moderates should realise the precarious position in which we find ourselves. We must stop this profligate spending.
The Conservative Party is often asked where it would cut Government expenditure. It is stupid to spend nearly £1,000 million on food subsidies when many people do not need them. I do not need food subsidies for my bread. Nor do many other people. However, there are some who need double the subsidy on bread and milk. It is stupid to give

blanket subsidies for food or housing. The Conservative Party and any member of any party must have compassion, but overall blanket compassion is a waste. Compassion should be directed to the people who really need it.

Mr. Ron Thomas: Means tests.

Mr. Clark: Means tests, call them what we like. No Government, whether Labour or Conservative, have the right to spend the taxpayer's, not the Government's, money unless the taxpayer gets full value for it. There is no point in taking money from the taxpayer and giving it to somebody who does not need it. That is merely creating a two-tier social structure.
The Queen's Speech, despite the glimmer of hope that we had from Chequers, does nothing to help the economic revival of this country. The sooner the Prime Minister and his colleagues resign, the better it will be for this country.

7.7 p.m.

Mr. John Horam: I support the present direction of the Government's policy and I want to suggest that my right hon. and hon. Friends should press it even more forcefully than they have so far. The situation demands boldness, not timidity. The people of this country will welcome boldness. Indeed, the natural inclination of my right hon. Friend the Chancellor of the Exchequer is towards boldness. If we do not have this kind of resolution from the Government, despite the successes which they may enjoy, they may ultimately fail in the task to which they have set their hand.
A clear strand in the strategy being pursued by the Government is to push additional resources into industry and commerce. I should like them to do even more than they are doing now. I want them to cut public expenditure more quickly than they intend—I mean in the next financial year 1976–77, not 1977–78—and simultaneously to stimulate demand for industrial and commercial products by approximately the same amount as they cut public expenditure.
Some of my hon. Friends have put down an amendment calling for reflation. I partly agree with that, but not entirely, because they do not simultaneously suggest cuts in public expenditure, except


in defence. I do not wholly disagree with their objective, but I simply cannot understand their arithmetic. Such demands on the economy are bound to lead to further inflationary pressure. Indeed, in the present situation it would be inflationary disaster.

Mr. Ron Thomas: I hope that my hon. Friend will spell out the economic logic behind his last statement. As the Chancellor pointed out, one of the main reasons for the high public sector borrowing requirement is the high level of unemployment. Is my hon. Friend suggesting that a cut in public expenditure will increase unemployment and the public sector borrowing requirement?

Mr. Horam: On the contrary, what I am suggesting will decrease the level of unemployment, and my last remark before I was interrupted was that I do not agree with my hon. Friends on this issue. The consequence of their policy would be further unemployment, because it would lead to further inflation. That is the logical consequence of what they are proposing. I am suggesting a compromise between the two arguments whereby we cut public expenditure and fill that hole by an additional demand for consumer products, which would reduce unemployment.
From the Conservatives we get an equally fallacious argument: they want to cut public expenditure and leave it at that. If we were to do that alone, we should dig a deflationary hole that would take many mountains to fill and result in many thousands being unemployed. I do not see how one can follow that road without disastrous consequences for the economy and the social fabric of this country.
Instead, we should continue with the general approach towards which the Government are working, but we should do so more resolutely and forcefully, and with more imagination than the Government have so far shown. My right hon. Friend the Chancellor has done a lot to help industry. Last November he put through a controversial Budget which was attacked by many of my hon. Friends, but he was right because fundamentally what he did helped industry where it needed helping.
Since then, my right hon. Friend has brought forward further micro-economic

measures to assist industry, but I am more sceptical than he is about the effects of these measures. I do not believe that they will create employment on the scale that he imagines and at the small cost that he thinks will be necessary. More important, my right hon. Friend's measures are essentially on the supply side. They give more resources to industry if it wants to invest but they do not stoke up demand for industrial products, which is the other essential criterion for industrial investment.
What is the situation which faces industry at the moment? My right hon. Friend said that the industrial cycle had possibly reached bottom, but it may not have done. There may be a further fall during the next six months. We cannot be sure about it. But even if it has reached bottom here and is recovering in other countries—we see some expansion in America and some in West Germany and Japan—the process is bound to be slow, and it will continue to proceed slowly over the next year.
Also, how much of that expansion shall we get? We face strong competition from West Germany and Japan, with a low utilisation of their capacity. Our prices are increasing considerably faster than theirs. We are thus at a competitive disadvantage. I fear that we may not get much of a stimulus during the next 12 months from the foreign trade sector.
On the contrary, there could be a net decline in our foreign trade balance, because although we may improve our export position, imports will begin to flow in faster. A major part of the decline in our imports over the last 12 months has been due to destocking. If we are bottoming out and going up again, there will be restocking and that will undermine the foreign trade balance. Equally, if we have to depreciate the pound to allow for an inferior price performance, that, too, will add to the cost of our imports. I therefore argue that, in addition to cutting public expenditure to allow for additional demand in the industrial and commercial sectors, we should consider the case for import controls.
I know that I am entering into a controversial and hotly topical subject, and I am aware of the argument against import


controls. I think that there is a possibility of retaliation by some countries, though I do not think that the case for import controls can be made strongly by our major competitive trading partners. I do not think that they would retaliate. I think, too, that import controls would to some extent add to inflation, but so will devaluation of the pound, which is the likely alternative.
In addition, and this is perhaps the most important argument against them, import controls would not help the efficiency of our industry in those sectors where they are imposed. The history of industrial and economic progress over the years has been the history of reducing trade barriers so that competition can flow freely, and it would be a step back to re-erect trade barriers, even in some small way.
What worries me is that we may have reached the situation where we, in the United Kingdom are too weak to take the exposed position of having no clear trade strategy and no element of protection in this area. Indeed, I fear that we may not take the positive measures that alone will secure our continued industrial improvement, if we are not more secure in this quarter and we shall be frozen into an attitude where we dare not take those measures because they will have too many consequences. To use a military term, it may be that we need to retreat a little before we advance again. That would help us to move strongly and purposefully towards the industrial strategy to which we have set our hands.
Professor Nield has made the case for this strategy, and as the months have gone by I have become more impressed by it than I was at the beginning. We are told that the Government will shortly introduce selective import controls. There is a danger in their present approach because they are being selective. As one of my hon. Friends said, if there is a selective approach, there will immediately be a queue of people at the Department of Trade asking for protection for their industry.
I would rather that the Government aimed for the total balance of payments affect which they want from import controls and then allowed particular industries to argue the matter out within that

effect, so that if one industry got more protection, another would get less. Nevertheless, much though I regret it in many ways, there is a lot to be said for some form of protection for British industry.
Import controls by themselves would be reflationary, and I would rely on them for part of the effect in making up the gap that I would create by cutting public expenditure more than the Government intend to do. But I would also stimulate home demand, because that is now the bigger part of the problem in terms of total demand deficiency.
The Conservatives will object that if we do that we shall not change the total public sector borrowing requirement. They will say that that will be left untouched if on the one hand we cut public expenditure and on the other reflate a little. That is true, but, none the less, we are improving one important element of the policy, namely, that within the total we are shifting resources away from the Government towards the industrial sector, and that is a shift in the right direction. Equally, as my hon. Friend the Member for Bristol North-West (Mr. Thomas) said, part of the huge size of the public sector borrowing requirement is due to the slump and these measures would reduce that and thereby reduce the public sector borrowing requirement.
On the question of inflation, the kind of the advance on the Government position that I am suggesting would have beneficial effects in terms of an incomes policy. If we try systematically to help the industrial and commercial sectors more than it appears to be the present intention to help them, and if we go for a clear and understood strategy for import controls we shall, I hope, achieve a better rapport with the TUC than might otherwise be the case. The TUC would not like cuts in public expenditure, but it cannot have everything. The CBI would not like import controls. What I have suggested is the way in which the Government should advance on their present strategy.
I want to say one thing on a totally different subject but one which is, none the less, in a way related to what I have been saying. I am becoming increasingly concerned—and reference has been made to this topic by a number of hon. Members—about the effect of tax and inflation on


the lower income groups. I have pressed my right hon. Friend about this before and he has said that there is a Cabinet sub-committee monitoring the effect of these evils—a necessary evil, perhaps, in the case of taxation—on the lower income groups. But so far we have heard nothing from it.
The statistics are truly terrifying. For example, we are raising £750 million a year from people earning less than the supplementary benefit level, plus an addition for rent and rates. That is a staggering fact. We are taking 10 per cent. now in taxation from people who are earning only two-thirds of the national average wage, while 10 years ago we were taking nothing from them.
I know that my right hon. Friends have done a great deal to help those who are not working, with a 70 per cent. increase in the pension and, most recently, a new benefit for the totally disabled. I should like them now to consider seriously those who are in work, for it is on them that we ultimately depend for this country's salvation.

7.21 p.m.

Mr. J. Enoch Powell: I hope that I shall do no harm to the hon. Member for Gateshead, West (Mr. Horam) if I say that I am glad to follow a speech which was not only courageous but in many respects clear sighted. I do not agree, for reasons which will presently appear, with his point of view upon import controls, but as a whole I feel that his was an important contribution to this debate.
It may be helpful if, at the outset, I relieve any anxieties which the Government Whips may still have after last night's Division, and destroy any residual hopes of the Whips on the Opposition Front Bench, by saying that my hon. Friends on this Bench and I do not feel called upon to support a motion of economic censure upon the Government moved by an Opposition whose past administration is still a major factor in the inflationary difficulties from which this country suffers—and, moreover, an Opposition who have still not reached the point of being able to answer in an incisive and intelligible manner questions as to the course of action which they are pressing upon the Government.
The Chancellor of the Exchequer, whose absence during most of this debate we have regretted, was more frank than he or any previous Chancellor has been in examining the problem of the public sector borrowing requirement and exposing quite candidly the criteria which he takes into account in deciding how large a requirement it is wise to tolerate in the coming financial year.
The right hon. Gentleman certainly recognised plainly that that figure, that datum, is the crucial and pivotal point in economic policy, but I want to approach it from a different point of view by quoting a sentence from the early part of the Gracious Speech. It was in the foreign affairs part of the Gracious Speech, in fact, in which Her Majesty was advised to say that her Government would
maintain their full support of international efforts to…reduce…imbalances of payments.
The most remarkable aspect of that statement is that hardly anyone who heard it or read it would regard it as in any way remarkable. Yet it is upon the face of it plain nonsense—nonsense to which we have become so used that our critical faculties have ceased to operate.
There are no imbalances of payments, for the simple reason that a deficit or a surplus on the balance of payments cannot exist, and for the most simple of all reasons: that is, that a balance of payments is not two things, but one. What we are pleased to call the balance of payments is the total of pounds sterling which have been relinquished to acquire other currencies and which have been acquired by the relinquishment of other currencies. It is, in fact, one total which we are pleased, for certain purposes, to analyse into two columns, and then we torment ourselves when, for various reasons, we do not get the figures on either side quite to add up. However, thanks to a most gracious dispensation of Providence, the number of pounds relinquished in any given period in exchange for foreign currencies is exactly the same as the number of pounds which are acquired by relinquishing foreign currencies—for, indeed, they are the same pounds.
If it be objected that I am being too captious in treating the balance of payments as referring to the overall balance


of payments, in which, as aforesaid, there never can be, by definition, either surplus or deficit, but that, clearly, the meaning here was deficit or surplus on current account, then the statement is just as absurd and the aspiration to reduce such imbalances equally irrelevant.
Of course it is true that if one compiles figures in two columns by analysing the motives with which sterling is relinquished or obtained, and if one then proceeds to draw a horizontal line across these two columns and denote the part above as the current account and the part below as the capital account, then it will be an extraordinary accident if the totals balance above and below the line. Except by a freak, there is bound to be a deficit on current account and a surplus on capital account or vice versa.
However, by another and even more gracious dispensation of Providence, the deficit or surplus upon what we are pleased to call current account is always exactly equal, though in the opposite direcction, to the surplus or deficit upon capital account, and there is no reason in the world why any particular country should not at any particular time have a deficit or a surplus on one part of its analysis of payments, confident in the assured knowledge that there is a corresponding surplus or deficit, as the case may be, on the remainder. Indeed, the great countries of the western hemisphere—the United States, Canada—would literally not exist as nations today unless, for a great part of the nineteenth and a a good deal of the twentieth centuries, they had had howling deficits on their current account; for a deficit on the current account is the necessary condition of a surplus on the capital account—it is the necessary condition of an inflow of capital.
So we might say to ourselves, applying this cheerful doctrine: if we have a deficit on our current account, that means that the rest of the world is investing in Britain, and what an excellent thing; and on the other hand, if we should happen to have a surplus on current account, then that would mean that Britain was investing in the rest of the world, and what an excellent thing that, too, would be!

Mr. Frank Tomney: What is the right hon. Gentleman's own position?

Mr. Powell: I can understand the anxiety of the hon. Member, and, perhaps, of other hon. Members, that I should resume my seat, but I am intending presently to apply these general propositions, which are not widely understood—otherwise, statements like this would not be placed in the mouth of Her Most Gracious Majesty.

Mr. Tomney: But what is the right hon. Gentleman's view?

Mr. Powell: I shall hope to carry the hon. Gentleman and others with me in inquiring, as I now proceed to do, why then it is that we are so feverishly anxious about what we call the deficit on our balance of payments, by which we mean our deficit on trade, or sometimes even only our deficit on visible trade? Why is it that we have proposals from all sectors or many sectors of the party opposite for controls upon imports in order to—I am sure that I am quoting—
rectify the deficit on the balance of payments
as though that were an evil? Why do we have the Government going round the world—in fact, I do not think they go much farther than the Middle East; at any rate, going to the Middle East and to the International Monetary Fund—to borrow huge sums of money in order, we are told, to pay for the deficit on the balance of payments; that is to say, to ensure, since a deficit on the current account is always equal to a surplus on the capital account, an even larger surplus on the capital account than we would otherwise have? [Interruption.] That is indeed the meaning of borrowing from abroad and of Government borrowing in particular. The Government are increasing the capital surplus in order to counterbalance a current deficit.
In fact, there is a certain sardonic irony in the very same Government, who would not be able to increase net borrowing unless there were a corresponding deficit on the current balance of payments, treating that very deficit which enables them to carry out their borrowing as though it were a most undesirable and regrettable phenomenon.
So, proceeding, I hope, in the direction in which the hon. Member for Hammersmith, North (Mr. Tomney) wishes me to proceed, I inquire again why it is that these proposals are constantly made and these steps are constantly taken. For I fear we have had indications that the Government may, indeed, be contemplating proceeding to direct intervention in our current account by arbitrarily controlling imports. Why are these steps so constantly taken or advocated in order to deal with what, on the face of it, is no problem at all, with something which, as the ship's steward in Punch said of seasickness many years ago, "Does itself"?
There are two causes; for when men behave irrationally they may not do so for reasons but at least they always have causes for doing so. Both of the causes are bad and, therefore, dangerous. The first cause is to avoid payments balancing at a lower exchange rate than that which prevails at the moment, or, to put it conversely, to ensure by intervention that the balance which will take place anyhow takes place at a slightly higher or, indeed, substantially higher—my argument does not depend upon degree—rate of exchange for sterling in terms of other currencies than it otherwise would.
It is a profound fallacy to suppose that there is anything to be regretted in a fall in the exchange rate. A fall in the exchange rate mirrors one or both of two things. It either mirrors a decline in our real terms of trade, or else, or also, it mirrors differential inflation in this country compared with inflation in the other countries with whose currencies we are comparing the exchange value of our own. On neither of those grounds is a fall, if there be a fall, in the exchange rate a sign that something is wrong with us or that the fall ought to be suppressed and forcibly reversed.
If a fall in the exchange rate reflects a fall in the real terms of trade—if it really means that an item we are producing at the moment exchanges in Toronto or Timbuctoo for less than it formerly did—that is due to an alteration in the economic pattern of the world as a whole. The sooner and the more accurately we know about it, the sooner and the more accurately we shall adapt and alter our behaviour and productive efforts to fit those changes in the real world of which,

in the end, we are the servants and not the masters, whether under a Labour Government or under any other sort of Government in this country.
However, for the most part a fall in the exchange rate, certainly in our recent experience, mirrors not a real deterioration in our terms of trade or an alteration in world supply and demand for those items which our brains and hands produce for export, but differential inflation. But the fact that differential inflation is mirrored by a falling exchange rate does not make us any the worse off.
One can prove that by simple experiment. Suppose that the quantity of money in circulation in this country were multiplied by 10 overnight. Everyone knows what the exchange rate, if free, would be in the morning. The decimal point would be moved one place to the left. Yet a given quantity of British goods, tourist attractions in this country or anything else you, Mr. Deputy Speaker, like to specify, would exchange in exactly the same way as the day before for the same quantities of what we wish to procure from the rest of the world.
Thus, to suppress or distort alterations in the exchange rate is pure evil. It is simply denying ourselves the knowledge of what is happening in the real world or denying ourselves the knowledge, so far as it is worth having, of the differential rate at which inflation is proceeding here and elsewhere. The fall in the rate is, in short, either harmless or beneficial.
It is a misconception to suppose, as has been said at least once or twice in this debate, that a fall in the exchange rate is inflationary. A fall in the exchange rate increases the price of imports relative to everything else and the profitability of exports relative to everything else, but it does not cause all prices to rise. It simply shifts the internal price schedule in the country, making some items dearer and others, therefore, cheaper in real terms, in such a way that we can adjust ourselves—indeed, it is the mechanism by which we do continuously adjust ourselves—to the changes and demands of the real world.
However, there is another reason which prompts the attempt of Government by the use of their power and resources, to intervene in what is called the balance of payments. Certainly it is one of the


motives with which the right hon. Gentleman the Chancellor of the Exchequer goes a borrowing. Here we come at last to the one really deplorable aspect of the British deficit on the balance of payments or, if we like so to describe it, the British surplus on capital account. It is that so much of the inflow of capital into this country—so large a part of the capital surplus which balances the current deficit—is not inward investment by the rest of the world in British industry. It is not even voluntary lending by the rest of the world to British borrowers, because the rest of the world has decided that this is the best place to put its money. It is a forced or politically-contrived loan from the rest of the world in order to sustain the level of public expenditure in this country at a point which constantly exposes this country to the risk of a recurrence of runaway inflation.
And so I return to the key point in the Chancellor of the Exchequer's speech. The right hon. Gentleman knows perfectly well that with a net borrowing requirement of £9,000 million or £12,000 million, he is walking a knife edge. That might not matter—some of us might be so callous as not particularly to mind whether the right hon. Gentleman was walking a knife edge, but he is leading the country along the knife edge. A brief period in which he fails to do what he would have us believe he is substantially doing at present, namely, covering that deficit from internal savings or external borrowings, would plunge us back into a higher rate of inflation than we have yet experienced. The right hon. Gentleman knows that. A great many right hon. and hon. Members know that perfectly well. We are gambling with a risk of inflation far more severe than what we have experienced. We are gambling with all that that would mean not merely to our economic but to our social structure when we envisage the continuation of the public sector borrowing requirement at the sort of level which the right hon. Gentleman is apparently still prepared to contemplate for the coming financial year.
The situation is still malleable. Unless habits in the Treasury have altered in a way that I do not believe that they have, there is still time for a major influence upon the shape of public spending—

capital, I think, much more than current—to be exercised by the Chancellor of the Exchequer and the Government in the months immediately ahead. The Chancellor has the duty—it is an overriding duty—to diminish the scale of risk which he is taking by the size of the net borrowing requirement he maintains. In asking him this I ask neither of him nor of Labour Members that they should abate one jot of their political aspirations. I am not arguing for or against a transfer of more or less of the national wealth or national resources to or from public or private control. I am only saying that it is the Chancellor's duty—and he knows that it is—to ensure that that transfer, if it is the political will of the Labour Party that it should take place, takes place at such a rate that it does not bring with it the risk of financial and social chaos.
At the beginning of this Parliament, a year ago, my hon. Friends and I said that we recognised that in making any advances in that direction the Chancellor of the Exchequer would find himself bereft of some of his fairweather friends and would need all the understanding and support which this House and the country can give him. I say again this evening that as this is the overriding duty of the Chancellor and the Government, the overriding national requirement, in so far as the Government and the Chancellor fulfil it, he shall have what support we can give to him.

7.43 p.m.

Mr. Eric S. Heffer: The whole House will agree that once again we have had a very important and interesting speech from the right hon. Member for Down, South (Mr. Powell). Some of us have been treated to his logic for many years. At times we have agreed with much of what he has said, but at other times we have found ourselves in fundamental conflict with him.
I remember the right hon. Gentleman advocating in the House in many past economic debates that we must have the floating pound. He seemed to imply that if there were a floating pound this would, not entirely but within reason, solve most of our economic problems. We have the floating pound now, and our economic problems remain.
Of course, if we cut public expenditure in the way the right hon. Gentleman suggests, no doubt we could balance our national budget—although he seems to argue that it is of no consequence to be concerned with the deficit on our balance of payments. However, something that apparently does not concern the right hon. Gentleman seems to concern just about everyone else in the House. For many years we have heard about almost nothing else but efforts to deal with the deficit on the balance of payments, and the great agonies that we have gone through in the House were precisely because of efforts made in that direction.
We can, of course, cut public expenditure to the bone. We can then have mass unemployment. But surely no one in the House is suggesting that for one moment. It is true that it would solve the problems in one sense, but do we want to solve our problems in that way? I should have thought that no hon. Member who was concerned with ordinary people and their lives would ever suggest a policy which would lead to misery and poverty among masses of people who are in any case, already suffering much too much from the present high level of unemployment.

Mr. Powell: The hon. Member has been very courteous and I apologise for interrupting him. It is only to say that surely he appreciates that the transfer of a block of resources from private to public control or vice versa does not diminish the quantity of them.

Mr. Heffer: I accept that absolutely—if it means just that and that only. But I am not certain that that is precisely what is meant in relation to the right hon. Gentleman's argument.
I did not come to the Chamber purely to debate with the right hon. Gentleman, obviously, and I want to turn to other matters. I agree entirely with my right hon. Friend the Chancellor of the Exchequer that we are in the most serious economic crisis that this country has known since before the Second World War. We have, as it were, two crises in one. On the one hand, there is the world crisis, which affects us. On the other hand, we have the peculiar British crisis grafted on to the world crisis.
The British crisis is very much due to the fact that our capitalists, as capitalists, have actually failed. Whereas capitalists

in other countries were not taking the maximum out in profit and were putting a great deal back into their companies and industries in the form of investment, machinery and growth in technology, our capitalists were taking a maximum out without putting very much back. [HON. MEMBERS: "Rubbish.") Hon. Members may say "Rubbish", but it is a fact that we are now taking out of Cammell Laird, for example, machinery that was installed in 1904. That is pretty outdated, and I should have thought that if we went to Japanese, American or continental shipyards we should find that they had got rid of that sort of machinery years ago. That is one of the reasons why we are in our present situation.

Mrs. Elaine Kellett-Bowman: Can the hon. Gentleman guarantee that if new machinery is put in it will be operated by the unions concerned, unlike some of the steel plant and unlike the grain terminal not far from his home?

Mr. Ridley: Answer.

Mr. Heffer: I trust that the hon. Gentleman will not keep interrupting me. If there are to be these interruptions there will not be much opportunity for other hon. Members to speak in the debate. The answer is very simple. The hon. Lady knows that the grain terminal is now working. If there were problems with the terminal, they were caused by the intransigence not only of the dockers but of the employers who were not prepared to get round a table to solve the problem. Some of us argued for a solution at the very beginning of the argument. The men are not holding up the grain terminal and new technology is being used.
In her speech to the Conservative Party Conference, the Leader of the Opposition said that this country's problems were caused not by too much capitalism but by too much Socialism and that Socialism had been intervening and ruining the economy. In that case, the Governments she has supported have been first-class Socialists. They have intervened as much in economic matters as any Governments we have ever had and, in some respects, even more. We have not had Socialism, we have had controlled capitalism. That is what we have now, and it is much closer to the corporate State than to


Socialism. We have to decide whether to go back to the type of society for which the Leader of the Opposition has been arguing, or to go forward to a genuinely planned Socialist economic system.

Mr. Nick Budgen: Communism.

Mr. Heffer: The hon. Member is like a little pip-squeak. Every time you push him with your finger, he shouts, "Communist". Some hon. Members expect more than that sort of nonsense in arguments.
I am trying to argue a very serious case in relation to this country's problems. One hon. Member opposite has said that the motive force in a capitalist society is profit. If we have restraints on dividends and profits, together with price controls, then sooner or later the capitalist will not invest because his profit has been removed. The logical answer is not to go back to the system which has failed us up to now anyway, but to advance beyond that to a society with planned investment where we put our industries where they are required in a planned way and create a system of full employment. Unlike the hon. Member for Cornwall, North (Mr. Pardoe), I do not believe that our economic problems will be solved by proportional representation. It will need much more than that.
I believe that we have to move stage by stage towards a national planned Socialist policy. I must say to my colleagues on the Front Bench that the Chequers statement was a retreat from what we said at the Labour Party Conference. The Chancellor of the Exchequer is very keen on selectively quoting the part of the document "Labour and Industry" which says that we cannot have a general reflation. I will quote to him another part, typical of many, in the document. It says:
The Government must also, we believe, give much greater emphasis to planning Britain needs a new economic and industrial plan.
The Chequers statement says:
One response to the problem might be for the Government to get in hand a new National Plan. The likelihood is that any plan which erected a single complete and mutually consistent set of industrial forecasts and targets would rapidly be falsified by events and have to be discarded.

etcetera, etcetera. On the one hand we have members of the Government in the NEC endorsing a document calling for a national plan while, on the other hand, the Chequers statement says we are not to have a national plan. I just point this out to Ministers because they ought to know that there is an inconsistency in this matter.
Import controls are a matter of great importance, and although I do not think they are a Socialist solution to our problems, we must realise that in our transition to a policy of planned investment and growth and the development of the National Enterprise Board, which, I fear, will not be used as effectively as we had hoped, we shall need some immediate, concrete policies to deal with the rising level of unemployment. Import controls, selective up to a point, are an immediate way of, if not bringing down the level of unemployment, at least stopping it from rising. We ought to have a 15 per cent. surcharge on about three-quarters of the imports of manufactured and semi-manufactured goods and there should be quota controls in relation to other sectors such as textiles, footwear and television tubes.
Some hon Members may say that this will lead to retaliation, but in America in 1971 they had a 10 per cent. import surcharge for a number of months. Denmark has had a similar surcharge and Sweden had a 15 per cent. surcharge. Even Japan, which has never suggested that it has import controls, has environmental and safety regulations through which it has controlled imports since the Second World War. There are plenty of examples of countries which have controlled imports for a period as a necessary measure to deal with an immediate problem.
We should be doing that now. We should have had a statement about it from the Government today, and I am sorry that we have not. Import controls could be imposed even within the GATT and EEC provisions. In one respect I agree with the CBI for once. It said that if other countries were operating import controls for a temporary period Britain should do something similar. The TUC has the right approach, too, but I would go further than the TUC in order to save more jobs and create more work.
I am absolutely horrified at the complacency which seems to have developed


on the Government Front Bench over the growth of unemployment. I upset one of my hon. Friends the other day when I said that a period of unemployment for the Front Bench would do it the world of good. It would clarify the minds of my right hon. Friends about unemployment. There would be nothing better than a bout of unemployment to drive home to them what unemployment really means. Most hon. Members have never been unemployed, although I konw that some of my hon. Friends have experienced it. It is a tragedy for the individual and the family. The Labour Government and the Labour Party have always been dedicated to a policy of full employment. We therefore argue against public expenditure cuts because we do not want unemployment to go up.
Our amendment says that we want no cuts in essential public expenditure, apart from defence where we would like to see less spending. We do not say that all public expenditure is necessary, and it is not. There has been an enormous growth in local authority public expenditure, and much of it totally unnecessary. We do not want cuts which are likely to throw people out of work. I must tell my right hon. Friends that if such cuts are proposed they will not go through this House easily. We shall not sit idly back and watch unemployment grow.
My right hon. and hon. Friends have an enormously difficult job to do, and I sympathise with them. It would not be a bad idea if one or two of them were moved around so that they could have a rest, as well as for other reasons. To be in that sort of job for a long time does no one any good, and it is not good for the country.
I believe that the Government could take more positive action to deal with the situation in the construction industry. On Mersey side alone, 10,000 building and construction workers are unemployed. Of that number 3,000 are highly skilled craftsmen. The Chancellor said that in the future when the upturn comes perhaps there will be financial aid to get these people to move to other parts of their country. What does he expect them to do? Are they to take their homes on their backs? It is all very well talking along those lines—

Mr. Loyden: Is my hon. Friend aware that out-of-work building and construction workers on Merseyside represent more than 50 per cent. of total unemployment in the construction industry in the North-West? Does he realise that the figure is running at about 13,500, yet there are 22,000 people on the waiting list for houses?

Mr. Heffer: My hon. Friend has made precisely the point I had intended to make about the housing situation. The Government must look very closely at the construction industry and at the need to pump more money into it in order that more houses can be built and work provided.
We do not criticise the Queen's Speech for what is in it but for what has been left out. We support all the proposals which will advance us along the road towards the type of egalitarian Socialist society in which we believe. We shall support the measures that were promised in the manifesto. But we deplore the fact that the Government basically are not getting to grips with the economic crisis and are not dealing with it in a Socialist fashion. That is why we tabled our amendment, and that is why, had we been given the opportunity, we would have voted for it this evening.

8.6 p.m.

Mr. David Price: I thought that the hon. Member for Liverpool, Walton (Mr. Heffer) was at his best tonight. I accept that he is a full-blooded Socialist, but I think that much of what he said followed logically. Not being a Socialist myself, however, I propose to move in a different direction from the hon. Member, but I think that at least we understand each other. I appreciate his deep feelings and anxiety about the employment situation. Many of us who are not Socialists share those anxieties. Equally, I hope he understands that inflation at 26 per cent. a year brings its own personal agonies, which include growing unemployment. In many ways unemployment and inflation are two sides of the same coin.
I do not intend to attempt my own tour d'horizon of our economic situation. Instead I shall take up only three points from the Gracious Speech which I hope will tie up with what has been


said by other hon. Members. The Gracious Speech says:
Proposals will be put forward for a major review of the practice and procedure of Parliament.
In the context of our economic performance and of seeking a better and more effective control of public expenditure through the economic, social and political objectives of Parliament, our present time scale of events is a total nonsense.
In a normal Session, Parliament is opened and the Government present the Queen's Speech at the end of October, laying before us all the Government's proposals and general aspirations. We then have to wait until the early New Year for the Estimates, the details of how the proposals will be paid for. The White Paper on public expenditure, the key document, which looks five years ahead on a rolling average, appears at the end of February or in early March. The Budget, which sets out how we pay for all these measures, does not appear until April. It would be far more convenient all round if these four events happened more or less simultaneously.
I suggest, therefore, that when we set up a committee to look at these matters, very urgent attention should be given to this matter. Then we should have a much more meaningful and intelligent discussion in the House. This is a non-party point which I hope will appeal as much to those on the far Left as to those on the Right.
My second point concerns planning agreements. The Gracious Speech says:
My Government will also embark on a series of Planning Agreements with large companies in selected key sectors of industry".
I believe that the hon. Member for Walton praised that idea.
As a seeker after truth, I ask the Government what they mean by "planning agreements". The Secretary of State for Industry said last Thursday:
Sectoral planning is, of course, a key component in our approach to an industrial strategy, but a sector cannot make, cannot keep and cannot deliver an agreement. Only a company can do that, and only a company can benefit from the relationship with Government that a planning agreement entails, and from the stable framework that planning agreements can provide—and, incidentally, from the reciprocal information provisions".—[Official Report, 20th November 1975: Vol. 901, c. 187–8.]

What do the Government mean by that? Any investment decision maker, whether in the public or the private sector, naturally looks at the potential return on capital before deciding to make an investment. Are the Government proposing to guarantee a minimum return on capital to those firms which make planning agreements with them?
Let us look at the sort of factors that are considered by a would-be investor in deciding whether to invest. He obviously considers the market projections at home and abroad. Do the Government think that they can contribute to that? The would-be investor considers the projections of world trade and domestic economic trends, the probable rates of inflation, trends in the exchange rates of sterling, changes in British and other countries' tariff policies, changes in world commodity prices, and what is likely to happen to wages. Can the Government offer any guarantee on any of those factors? I suggest that they cannot, and therefore I wonder where is the reciprocity in the proposed planning agreements.
I cannot see how the Government can even pretend to do it unless they return to the old illusion of a detailed national plan in the style of Lord George-Brown. But the idea of a return to that style of planning has been rejected by the Government, as came out very clearly in paragraph 10 of the White Paper on the Chequers talks. What will the planning agreements contain? Above all, what is the reciprocity the Government claim to be able to offer to firms which make company agreements, no doubt with the Department of Industry in most cases? We should know, because Minister after Minister keeps returning to the importance of these agreements.
The third feature of the Gracious Speech to which I wish to draw attention relates to industrial democracy. We read:
My Ministers will continue to encourage the development of industrial democracy in both public and private sectors.
Ministers have been using the phrase a great deal in recent months. What do they mean by it? It can mean many different things to different people. Many of us are by no means unsympathetic to some of the ideas that can be contained in that broad expression, but I hope that the Government do not simply mean, as they


appear to mean, two-tier boards on the German pattern and worker directors on the supervisory board. It is a grave mistake to put the two issues together.
The question whether it would be right to change our company law and have two-tier boards and the question whether by law there should be worker directors should each be examined in its own right. Perhaps those questions come together eventually, but they should not do so in the first instance. There are substantial objections to both which do not come entirely from management or the Conservative Party. I know quite a number of trade unionists who would object to worker directors. I counsel the Government to move carefully in both areas, and at least to try a few experiments before embarking on general legislation.
If by their use of the phrase "industrial democracy" the Government are trying to say that all is not well in human relations in industry and that we must try to find ways to improve those relationships, to make them more meaningful, I am entirely with them. I have been saying so in a quiet way for the past 30 years. My maiden speech more than 20 years ago was on precisely that theme.
Although the problem in industry remains, I believe that it is no longer limited to industry and that it covers much of our national life. There is an increasing alienation of ordinary people of all types from our emerging society and from what they consider to be the Establishment. The feeling of "them" and "us" is no longer a peculiarity of the shop floor in a large engineering works. It is more and more the normal feeling of ordinary people throughout the country about that amorphous thing, the Establishment, the "them" who are increasingly impersonal. People feel more and more remote from them, whether "they" are making decisions about the rates, the problem of the doctors, or the self-employed.
That is why we as Members of Parliament have so many constituents coming to see us or writing to us on matters which are well outside our jurisdiction. They come to us because they do not know to whom else to go. We appear in a curious and vague way to represent authority, or at least to have access to

authority. A measure of the alienation in our society is the vast increase in the problem cases which we have and which we did not have 20 years ago, because people then recognised that they were not within our province.
There is also the problem of the revolution of rising expectations. That expression used to be applied to the underdeveloped countries, but it now applies even more to the developed countries. The public have been unprepared for economic setbacks. They have expectations of affluence unrelated to past or present performance. There seems to be an assumption that it is one's right, by virtue of citizenship and nothing else, each year to be materially a bit better off than one was the year before, irrespective of one's own efforts or the efforts of one's company or organisation, or one's country's efforts. The old cry of "Jam yesterday; jam tomorrow; but never jam today" has been replaced by the cry of "Tomorrow's jam today, and we'll strike if we don't get it".
It follows that the heart of our inflationary problem lies not in economics, but in people's attitudes. There is the allied problem of how to re-establish legitimate authority, the power to say "No" and the certainty that the decision "No" will stick. To my mind that is largely what the vague phrase "industrial democracy" is about—re-establishing legitimate and acceptable—I emphasise "acceptable"—authority.
Therefore, we must try to strike a new bargain—a new social contract, in the language of the present Government—but it must be with all the people and not just with the TUC or the CBI. I disagree with the Government's putting too much emphasis on the machinery of the trade union movement in discussion about industrial democracy. I hope that the Government realise that in people's minds the machinery—the Germans would call it the "apparat"—of the trade unions is as much "they" as the "apparat", of big business or the "apparat" of central Government; and they are alienated by all of them.
I suggest that the answer to this difficult problem is not to be found in a new social contract between Government and TUC. I am in no way opposed to good relations between Government and TUC. I believe that the social contract must be


firmly based on realities and not merely on expectations. But those realities must include the satisfaction of people's innate needs.
I suggest three dominant innate needs in all of us that must be accommodated in any effective social contract, needs that are denied in our present arrangements. I refer first to identity, the opposite of anonymity; secondly, to stimulation, the opposite of boredom; thirdly, to security, the opposite of anxiety. Unless a new social contract satisfies these three innate needs, it will not stick. Alienation will continue to grow. Legitimate and acceptable authority will not be restored.
To my mind this new approach—which is rather more fundamental than the approach of the Liberal spokesman, who sees these things in terms of electoral arrangements—is basic to our problems. It must be seen on the shop floor as well as in the villages in which people live. If the present alienation of rulers from ruled continues its downward course, the days of parliamentary democracy could well be numbered.
There is no inevitability about the demise of parliamentary democracy. But with a 26 per cent. annual rate of inflation, time is running short. I beg the Government to realise that these matters are urgent and that the problem is wider even than the problems of industry. The national problem is even larger, but in many ways it is similar.
Having said all this, I remain an incorrigible optimist. I could not have survived 20 years in this House unless I were an optimist.

8.22 p.m.

Mr. E. Fernyhough: I wish I could deal with many of the points raised in a thoughtful speech by the hon. Member for Eastleigh (Mr. Price), but I wish to keep my remarks brief. However, I recommend the hon. Gentleman to go to the Library tomorrow and to obtain a copy of a book by Aneurin Bevan called "In Place of Fear". He will find in that volume answers to some of the problems he posed.
The Conservative amendment was moved by the right hon. and learned Member for Surrey, East (Sir G. Howe). The amendment dares to say that the Conservatives

humbly regret that the Gracious Speech contains no practical policies to solve the United Kingdom's serious financial and economic problems, but proposes measures which only increase the powers of a centralised bureaucracy and diminish the freedom of the citizen.
But we must remember that the right hon. and learned Gentleman was one of the major pilots of the EEC legislation. He and his right hon. and learned Friend the Member for Hexham (Mr. Rippon) told us what a wonderful transformation would take place in the whole of our economic and financial circumstances once we were part of this great brotherhood. Never before have two former Ministers so misled this House.
We are now grappling with a balance of payments problem, the largest part of which derives from our relationship with the EEC. My right hon. Friend the Chancellor of the Exchequer said today that in general we had reached a balance in our trade and had reduced our oil deficit by a third. But what my right hon. Friend must know is the fact that in the first nine months of this year our trade deficit with the EEC was £280 million more than it was in the first nine months of last year. Our deficit with the EEC amounted to £1,900 million. Unless we can drastically reduce that figure and unless the rest of the Nine are prepared to play ball with us, we must back hook, line and sinker those of my hon. Friends who suggest that we should introduce import controls.
When I examine the trade figures of the EEC compared with the United Kingdom figures, I become a little upset when I see the difference in the amount of trade that we undertake with China, for example, and the trade which the other eight countries in the EEC carry out with that country. That also applies to our respective trade with the Comecon countries. The other eight members of the EEC, without us, do 10 times more trade with COMECON than we do; they likewise do seven times more trade with China than we do. It is a fantastic situation that in pursuing the cold war we are turning up our noses at trade with Eastern countries. The Germans, the French and the Italians spend a great deal of time in obtaining trade agreements in Peking, Moscow, Sofia, and in almost any other Communist capital. Such trade would afford substantial help to our Exchequer.
I hope that from now on we shall make the same attempts as our EEC colleagues to get into Communist markets. Germany for many years has taken great advantage of the situation. We must remember that initially West Germany said that it would have no communication with Eastern countries, but they have always done more trade with Eastern countries than the rest of the so-called free nations in Europe put together.
I now wish to turn to the proposals to nationalise the shipbuilding, ship-repairing and the aircraft industries. Some Conservative Members have stressed the point that the aircraft industry has had a marvellous export record. But we all know that, if it had not been for Government investment, there would be no aircraft industry. Since the end of the war hundreds of millions of pounds of public money have been ploughed into that industry. If the industry produced a plane that could fly, it claimed that aircraft as its own. But if the aircraft was unsuccessful, the industry put it on the Government's plate. Surely in view of all the money we have poured into the aircraft industry, we now have a right to take it over.
I am particularly pleased that we are taking over the shipbuilding and ship-repairing industry. I believe that risk capital cannot provide the funds necessary if the industry is to be updated and made really competitive so as to be in a position to compete effectively in a world where our percentage of gross annual shipbuilding tonnage is becoming lower and lower.
The men working in the shipbuilding and ship-repairing industries were disappointed that the Bill was not dealt with in the last Session. I am sure that they will be delighted that it will be dealt with this Session. They will welcome the Bill with every enthusiasm. It is important that a few of the principals in the shipbuilding industry have already indicated that they will be prepared to co-operate in ensuring the success of the nationalised industries.
No one represents a constituency with more experience of unemployment than I do. For 29 years I have dealt with this problem, which we have never overcome. I reiterate this warning: we can discuss democracy as much as we like. We can

say that our people are peaceable and responsible. But if we take from men and women the dignity and self-respect which come from earning a living, they will become discontented and dangerous.
This is what hurts me. If this country was at war we would mobilise all these people. We would put them in factories to make shells, bombs, torpedoes and blockbusters. We would then give those arms away. The people we gave them to would not want them. Nevertheless, we would insist on giving them away. The more we gave away the happier we would be. The country with which we were at war would do the same. Why, then, when there are so many human needs unsatisfied throughout the world can we not organise our economic affairs so that men and materials are brought together, so that the unsatisfied desires of millions can at last be met?

8.30 p.m.

Mr. George Reid: I shall confine my remarks to the situation in Scotland, as my country has been poorly served by both the Government and the Conservative Opposition in the past week.
Ever since my hon. Friend the Member for Moray and Nairn (Mrs. Ewing) won the Hamilton constituency in 1967, the response of Government, whether Conservative or Labour, to the needs of the Scottish people has been cynical, enforced and dilatory. Even today, when the great devolution debate in Scotland has been argued at all levels for 10 years, there are those in the House who would further delay, castrate and render ineffective the Scottish Assembly.
The fact that there are now only to be legislative proposals, and not a firm and guaranteed Assembly this Session, lends credence to the charge that London does not know what Scotland wants. It confirms what The Sunday Times said in a recent leader:
Most English politicians do not understand Scotland; care little for it; have neglected to find out about it; rarely visit it; and never debate it.
That being so, hon. Members may not appreciate why Scotland has been on the warpath for the past week. They may not know of the carefully orchestrated interviews which have appeared with full ministerial blessing in the Scottish Press


over the past year. I shall quote three of them.
First, I quote the words of the Undersecretary of State for Scotland with responsibility for devolution. On 31st January he said:
It is wrong to say that there has been a slippage. We are bang on target, and if anything we are ahead of schedule. I see nothing to suggest we will not publish the Devolution Bill by the beginning of November".
The Minister went on to stand by a timetable that would put the Bill on the statute book by July 1976, with the first elections to the Assembly by the end of 1976 or early 1977.
Next I quote the words of the Lord President of the Council on 30th April, when he was reported as saying:
The Assembly Bill will be the major bill of the new session". He subsequently confirmed to the Scottish Labour Executive on 21st July that a White Paper would be published in October, that the Bill would be out by the end of the year, and that legislation should go through in the 1975–6 session.
Against that background is it surprising that the people of Scotland should feel that their patience and trust have been cynically abused?
By dragging their feet on devolution, the major parties have made their pledges now worthless and have deepened the disillusion with Government from Westminster. The Scots are shrewd enough to appreciate that devolution would never come this far without the Scottish National Party. The corollary is that the pressure will now be maintained, and the most effective way will be to strengthen the SNP.
I now turn to the reason why these Benches want a strong Assembly, and why we wish to build on whatever devolution comes down to us. There are three main reasons. First, there is a fundamental need for self-control over our own national life. Secondly, there is a need for control over our own economy, both to stimulate indigenous growth and to eradicate the appalling problems of poverty. Thirdly, there is a need, given the shift of power towards Brussels, for a corresponding growth of political power on the periphery, in Scotland.
Devolution concerns not only a transfer of powers, but
how we adjust the relationship between Scotland and England, England and Wales.

It is the process by which two minority peoples—the Scots and the Welsh—adjust their relations with the majority, the English.
I am glad to see such percipience on the Labour Benches, for those words are contained in an article by the hon. Member for South Ayrshire (Mr. Sillars).
The real problem is the repeated refusal of English Members of Parliament to recognise that the United Kingdom is not a nation but a multinational State. The Union of 1707 may have created one Parliament, but it did not create an indivisible people. The pervasive Scots consciousness remains unchanged. The traditional carriers of nationalism—our institutions—have given us a prickly pride against alien domination. In law, English methods and concepts are profoundly foreign.
Put bluntly, we need self-government to satisfy our people's belief in their own identity, to ensure external recognition as a full and dignified member of world society, and to satisfy a fundamental need for self-control over our national life. [Interruption.] Hon. Members may say that that is disgraceful. Yes, the problems of poverty in Scotland—our legacy from London—are indeed disgraceful. If we take the supplementary benefit level as the qualifying point for poverty, 1,200,000 Scots are currently living in poverty. Scotland has 77 per cent. of the 5 per cent. most deprived areas in the United Kingdom.
Scotland has 97·5 per cent. of the 1 per cent. of worst multiple deprivation. Our incomes are 10 per cent. below the United Kingdom level. The percentage employed in low-paid jobs is 26 per cent. above the United Kingdom level. One child in 10 in Scotland is born to fail compared with one in 47 in the home counties of England. Our overcrowding is twice the United Kingdom average, our infant mortality is 12 per cent. higher, our sickness rate for men is 25 per cent. higher.
Yet we are rich in primary products—in agriculture, in fish, in forestry. We have surpluses in invisibles, in tourism and in financial services. We export 14 per cent. more per manufacturing worker than does the rest of the United Kingdom, and we possess £200,000 million worth of oil.
This is the central question. Will devolution create conditions in which


indigenous growth will flourish? Will it create the new wealth in Scotland to wipe out the old poverty? That is the dilemma which the Secretary of State, during his long tenure of office, has had to face unceasingly. Given the centralisers at the Treasury and in his own party, if the United Kingdom is booming, there is no need for a regional policy. If the United Kingdom is stagnant, all the incentives in the world will not move industry from the South-East to Scotland. How can Scotland expand when the centre is contracting or resisting expansion?
I say this quite bluntly: devolution itself will be unstable if it remains subject to central Keynesian management. If the Keynesians remain at the Treasury, still taking a single aggregate view of the British economy, there is no question of the Assembly having any meaningful economic autonomy.

Mr. Loyden: No one would argue with the hon. Gentleman's analysis of the problems in Scotland. Does he agree that it is not where the decisions are made but what decisions are made that will alter the situation?

Mr. Reid: Scottish decisions should be made in Edinburgh. Let the hon. Gentleman follow that argument.
There is an alternative way of promoting the movement of Scotland's unemployed resources, which is to compare the Scotland-England economic relationship with the Britain-West Germany relationship. If the situation is considered in these international terms, current Treasury policy is difficult to understand. When one country starts a deliberate boom, creating excess demand in a neighbouring country, the second country need only release for export the resources which the reflating country requires. That is the case which the Treasury argued with West Germany. Why not a similar Scotland-England relationship, with exported growth for England as Scotland moves towards the full employment of her resources? That implies a fully devolved Government in Edinburgh—with a Scottish Treasury and a Scottish Consolidated Fund—willing and able to finance their own balance of payments.
Lastly, I shall briefly refer to the European connection. Although for England joining the EEC probably meant the final, formal abdication of imperial pretensions, in Scotland it has brought a reawakened appreciation of our rôle as a small North European nation. As power grows at the centre, so does the need for corresponding power on the periphery. It is significant that Lord Kilbrandon, who sat through the proceedings of the Royal Commission on the Constitution for five years, should now give it as his opinion that Westminster will gradually wither away, with power being concentrated in Edinburgh and Brussels. The words "separatism" has no meaning within the Community.
Many hon. Members have prated endlessly about economic, social and religious freedom. Can they not now consider that most basic of all freedoms, the freedom of a distinctive people to take up again the reins of their national life? They talk unceasingly about too much government. That has been our experience in Scotland—too much misgovernment, too much London government. The House has ample experience of rewriting statutes for nations which have gained their freedom. The events of the past week have brought that process much closer for Scotland.

8.40 p.m.

Mr. John Evans: I trust that the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) will not mind if I do not follow him down the Scottish path which he pursued. I am a Tynesider with Welsh grandparents and I represent a Merseyside constituency. Many of the economic problems of Scotland apply equally to North-West and North-East England, but we English do not advocate the division of England into two parts. The problems of the United Kingdom, North England, Scotland and Wales are similar.
I am a member of the European Parliament. There is much that the European Parliament can learn from the House of Commons, but there is one respect in which the House can learn from the European Parliament. In the European Parliament when a Member puts his name down to take part in a debate he knows at the beginning of the debate whether


he will be called. A list is published and he is able to find out when he will take part in the debate. If this practice were adopted in the House, it would save hon. Members having to sit for many hours trying to get into the debate before realising that they will not be able to do so.
I add my voice of protest in the strongest possible terms at the lack of a clear programme or clear statement by thse Government in the Queen's Speech that they intend to tackle the evils of unemployment which pervade our society. I represent a large constituency in the North-East and I have lived for most of my life on Tyneside. I had personal experience of a great deal of unemployment when I worked in the shipyards on Tyneside. Not many hon. Members appreciate just what employment means, particularly to a man with a wife and young family to support. Unemployment as an economic weapon is unacceptable to me and to my constituency party.
The use of unemployment as an economic weapon is also unacceptable to Socialist parties in the European Parliament. A document called "Towards a Social Europe", produced by the Ninth Congress of Socialist Parties of the European Community, on page 4, paragraph 10, reads as follows:
The European Community and its member States must pursue a policy that guarantees the right to work. The right to work involves three basic requirements:

(a) Full employment, i.e. creation and maintenance of secure jobs.
(b) Equality of occupational opportunity hand in hand with the elimination of discrimination.
(c) Employment opportunities in keeping with the abilities and preference of workers throughout their working life thus providing the basis for social mobility.

This includes the provision in regional policy of alternative employment opportunities for workers.
Unemployment is not spread equally across the United Kingdom and to use terms such as "national average figure", of 4·4 or 4·5 per cent., is meaningless to areas such as mine.
If we got anywhere near to 4·5 per cent., we should believe that the millenium had arrived and that we had full employment, because our figures reach 12 or 14 per cent.—and higher for males. The

problem is not simply the number of men and women who are unemployed. There is also the much greater social evil of the number of school leavers unable to obtain any sort of employment and, more particularly, any employment that will provide them with training to become the highly skilled workers Britain will need in the future.
I say to the Government that we neglect training of our young people at our peril. A recurring theme in areas such as the North-West is that of declining industry, lack of skilled job opportunities, poor environment, poor educational facilities and the emigration of our best young people to the more prosperous parts of the country. This leads to a vicious circle of a further decline in industry, fewer skilled job opportunities and increasingly poor environment and greater emigration of our most able young people. There is also the ever-increasing problem of the effect of continuing unemployment on the minds and attitudes of our youngsters, and the hysterical and hypocritical braying of well-heeled sections of the community that our young people will not and do not want to work is bitter music indeed to young people in the dole queue waiting to claim their pittance.
The Government should also deal with the problem of working-class youngsters who cannot obtain skilled job apprenticeships, and I remind my right hon. Friend that if youngsters do not obtain apprenticeships in the first year after leaving school, the vast majority of them will be doomed to spend the rest of their working lives as unskilled labourers, with little opportunity of ever obtaining steady, worthwhile, well-paid jobs. The Government should seriously consider that the State should take on completely, through the network of industrial training boards, the entire responsibility of employing and training all apprentices and guarantee every boy and girl the right to learn a skill, trade or profession. It makes a nonsense of the education system which we are striving so hard to achieve and which would guarantee every child equality of opportunity, if, at the end of their school days, many children on Merseyside face unemployment and a desolate future, whereas the children in more prosperous areas face a bright and prosperous future.
This socially just policy should be implemented by utilising to the full the considerable amount of spare capacity in industry and the spare capacity available in technical colleges and polytechnics. This would have the added advantage of employing more school teachers. It is a scandal that in Britain, which is so short of those who can pass on skills, so many of our teachers should be unemployed.
I ask the Government and the TUC in the longer term, to give consideration to the amount of overtime being worked in our society. It is a scandal and it brings bitterness to people in areas such as mine, where there are many thousands unemployed, that some firms are working far too much overtime. We all appreciate that it is cheaper for the employer to have his workers on overtime than to employ more labour, but it creates bitterness, and I suggest that the Labour movement, particularly the trade union movement, should dwell upon it.
We recognise that there will be fewer job opportunities in future and fewer jobs to go round for the working population. Is it not time that we started to examine reducing the retirement age progressively from 65 towards 60? I have always regarded it as strange that the professional classes retire much earlier than 65 whereas those doing hard manual work retire at 65. I have always thought that it should be the other way round. Those who do jobs involving hard manual work should have the benefit of early retirement.
In the recent past the pro-Marketeers were telling those who took a contrary view about the EEC that Britain was at the bottom of the holiday league table. We are still bottom, and there has been no progress whatever towards increasing the holidays enjoyed by the British worker. Such a policy would also assist in the sharing of job opportunities.
I recognise that the NEB and planning agreements will affect our future beneficially, but I put it to my right hon. Friends that there is growing concern, and deep and increasingly bitter feeling, in areas such as the North-West, which in many ways were responsible for returning Labour to office in the February and October elections last year, about the level of unemployment from which we

are now suffering. The people in the North-West are making it clear to me and to other hon. Members from the area that they did not help to return a Labour Government in order that not only they but their children should suffer unemployment. I beg my right hon. Friends to appreciate that we must re-kindle the spirit and feeling of our people and prove to them that we are the party of full employment, and to ensure that full employment plays a leading part in all our future policies.

8.57 p.m.

Mr. Peter Hordem: In the short time available to me I shall not be able to follow very closely the remarks of the hon. Member for Newton (Mr. Evans), except to say that I am convinced that there can be no real cure of unemployment other than with the revival of the private sector and of private industry in particular. That is what concerns me most in our present position. I cannot envisage any possible revival in the private sector during the course of the coming year.
The Prime Minister, who opened this debate on the Gracious Speech, was very optimistic, but one would never have thought, in listening to him, that we face a position today in which sterling, in relation to the dollar, has been declining in the last four months at an annual rate of some 20 per cent. One would never have thought, in listening to him, that the volume of imports is growing while the volume of exports is declining.
I hope the Leader of the House will say how we are to handle the situation when there is a revival of world trade, for, if things go on as they are, there will be an even larger increase in imports, while there is no guarantee that our exports will rise commensurately unless there is room for them to do so—and there cannot be unless room is made by reductions in the public sector.
The Government have said that they will introduce selective import controls. I am against these in principle, and I also ask the House not to think that they provide any short-term solution. They are, in effect, nothing more than a further devaluation of the pound in terms of the value of the particular commodity.
The Chancellor of the Exchequer said a good deal about the financial deficit


and the borrowing requirements. He made a comparison with West Germany. It is true that the West German deficit is expected to be some 75,000 billion deutschemarks this year—about 7½ per cent. of their GNP.
I thought that I heard the Chancellor of the Exchequer say that even if our borrowing requirement were £12,000 million, that would represent only 6·5 per cent. of the GNP. In the first six months of this year, the GNP was running at an annual rate of £86,000 million. Taking an inflation rate of 21 per cent. and going to the end of the financial year, that would mean a GNP of £89,000 million. If the borrowing requirement is £12,000 million and it represents only 6·5 per cent. of the GNP, that suggests a GNP in the nature of £150,000 million. That is an unconscionable figure, and we shall have to read the right hon. Gentleman's speech carefully when it appears in print.
In relation to £150,000 million, what do the proposed cuts in public expenditure next year of £1,200 million mean? They are chicken feed. What room will they leave for the investment required if we are to have an industrial revival to cure the unemployment of which Government supporters complain? What room is there for any increase in personal expenditure? There is none at all. The Chancellor of the Exchequer said that personal savings were running at a high ratio at the moment. It is just as well that they are. They are running at an annual rate of £800 million a year. If the public sector borrowing requirement is £12,000 million, that still leaves a lot to borrow from the market, and there is no room for any revival of investment or for any increase in puersonal expenditure. Of course, the Government should have cut public expenditure a year ago to make room for the increase in private sector investment that we need so sorely. But at that time they were more intent on winning the General Election.
The Chancellor of the Exchequer made a comparison with West Germany. I saw a report today from the West German Council of Economic Advisers. The Germans are cutting what they call "the structural component" of the public sector deficit by half—which represents 35,500 million deutschemarks of their total ex-

pected deficit—by 1978. This Goverment have no proposals of that kind. This is the competition that we are up against, and we should be aware of it.
I refer next to the Sandilands Report. I hope that the Government will publish their recommendations about it very soon. The accountancy profession is ready for it. I hope, too, that the Government will respond favourably to the Report and accept its broad conclusions. If they do, they must bear in mind that the terms of reference of the Price Commission will have to be altered to take account of the effect of inflation on stocks—

Mr. Dennis Canavan: Rising prices.

Mr. Hordern: Inevitably it will mean some price increases. But we cannot expect a revival in private investment, thus creating the jobs that we want, unless we revise the terms of reference of the Price Commission.
The past few years have demonstrated beyond belief the fault in the whole Plowden approach to public expenditure. When inflation was at a low level, it seemed a reasonable way to control public expenditure. But even now the Chancellor says that, with the cash limits proposed for next year, he knows that only 50 per cent. of public expenditure will be covered.
When the CBI negotiates with the Government it is rather like negotiating with an avalanche. The Government do not know what the public expenditure deficit will be, and they do not know by how much public expenditure is rising. Even if they did, they have no means of controlling it. The situation is not only an unknown quantity, but it will clearly get worse.
We have been served very badly by advice from the Treasury for far too long. It is not the fault of Ministers in this or the previous Government. Successive Governments have suffered too long from inadequate advice from the Treasury. However, that is a personal view.
I am certain that unless the Government make room next year for a reduction in public expenditure, we shall not be able to achieve the kind of economic revival that this country sorely needs.

9.0 p.m.

Mr. John Peyton: We have now had five days of debate on the Gracious Speech. Many hon. Members who have sought to catch your eye, Mr. Deputy Speaker, have been unsuccessful. Many speeches have been thoughtful and sensible. However, it is unhappily true that they will not receive their just deserts or share of public attention. I wonder how many of those who took part in our debate feel in these times that their words will receive the attention which they warrant or make any impact at all upon events or, indeed, upon the thoughts of the Government.
The present plight of Parliament, which seems to have lost so much in prestige, power and influence, must be a matter of concern to all of us.

Mr. Canavan: Nostalgic nonsense.

Mr. Peyton: The hon. Gentleman describes himself when he talks about nostalgic nonsense. That is the state of his mind, and I will not intrude into it in any depth.
Not even the most devoted admirer of this administration could possibly claim that the Gracious Speech has been received with rapture; nor, indeed, have Ministers in the parts that they have played at the Dispatch Box done anything to garnish it with enthusiasm.
On Wednesday the Prime Minister, as my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said this afternoon, turned on his talent for history. Indeed, he touched it up as he went along. But during the course of his remarks he made little reference either to the contents of the Gracious Speech or to what was to happen in future. One hoped that he did not talk like that when he was at Rambouillet.
The next day the Secretary of State for Industry issued one of those now conventional laments about the state of British industry. It is a pity that the Labour Government do not sometimes remember that they have been in power for eight of the last 12 years. Perhaps the time is coming when they might accept some responsibility for the state of British industry instead of always blaming it upon others.
The Secretary of State for Industry, on the nationalisation of the shipbuilding and aircraft industries—unwanted, I think—contented himself with the rather bland remark:
Each of these industries has problems and weaknesses, which can best be tackled through public ownership."—[Official Report, 20th November 1975; Vol. 901, c. 188.]
The right hon. Gentleman's speech had the merit of being honest enough to show that he had no heart for the job at all.
On Monday—I leave out the Secretary of State for Social Services, because 1 was not here on Friday—the Secretary of State for Education and Science, in quite a long speech, hardly referred at all to the problems of education and was almost totally opaque as to his future intentions.
Today, the Chancellor of the Exchequer, who I recognise is always embarrassed by support from these benches and I therefore would not wish to give him too much support because this must be very difficult for him—[Interruption.]—The Chancellor blows me a kiss. That is one of the most eloquent things he has done today. The right hon. Gentleman started by placating the serried ranks behind him in his normal role of bruiser, but what he said later began seriously to worry his hon. Friend the Member for Tottenham (Mr. Atkinson).
The right hon. Gentleman said four things of interest. First, he recognised that the reduction in our balance of payments deficit was partly due, so he said very modestly, to the recession that we now have. Secondly, he recognised the need, at long last, to make good use of plant and machinery, as do our competitors. This is a lesson which I hope he will preach far and wide, and I hope that he will be listened to with more than usual attention.
The right hon. Gentleman put the dilemma very neatly. He said that what happens will depend upon work people seeing that more investment is being made, but in turn that investment will depend upon resources not being preempted by public or private use. My hon. Friend the Member for Croydon, South (Mr. Clark) pointed out very clearly and firmly how necessary it was that investment should be encouraged. I pause for a moment to ask right hon. and


hon. Members on the Government Front Bench how much time or trouble they have taken while they have been in office to give encouragement to anyone whose political ideas they do not share.
Thirdly, the right hon. Gentleman recognised that it was important that the Government should close the gap between income and expenditure—something which I think I can modestly claim has been urged on him fairly frequently from these benches—but he seems to put off the need until such time as recovery begins. I begin to wonder whether it will begin at all if he does not grasp the nettle and grasp it early enough.
There is a further point that I wish to put to the right hon. Gentleman, and I hope that he will pay attention to it. If and when recovery does start, many firms that have been living with reasonable comfort off the shelf, off existing stocks, will be hard hit by the new price of restocking and will find themselves short of working capital. Many of the hopes which the right hon. Gentleman expressed to himself with some comfort are likely to be wrecked on that rock.
The right hon. Gentleman made it clear that he understands the difficulties of bringing income and expenditure into balance. He said fairly clearly that he could not resort to indirect taxation because this would increase the cost of living. He could not go for companies because that would have a damaging effect upon the investment which he recognises we desperately need.
Lastly, the Chancellor of the Exchequer appeared to say that increased income tax, the main source to which he could look for some reduction of the borrowing requirement, would place an excessive burden on individuals who already carry enough.
As I said at the beginning of that little passage, I do not want to embarrass the right hon. Gentleman excessively but he does deserve at least some commendation for those remarks and I desperately hope that for the sake of us all he will carry those lessons into practice. However, we were ready for the fact that the right hon. Gentleman could not go too far on that sensible theme, and we were not unduly surprised when he reverted to his more natural rôle of thug.
It is sad to have to say it, but the content of the Queen's Speech is a lot of dull, indigestible fare—from which, however, there clearly emerge a few facts. The first is that Parliament will be kept busy, although the attention of the House will be diverted to a large extent to things which, though important in themselves, will have little serious impact on the way in which we get through our present crisis—the tied cottage, dock labour, the aircraft and shipbuilding industries, harassment of private practice and a development land tax. Neither I nor any outsider can believe that these things will make a major contribution to our country's welfare. We are also told that the working of Parliament will be reviewed. If past experience is any guide, this will mean simply that the power, prestige and influence of the House of Commons will be further curtailed to make life more comfortable for the Executive.
The third fact which emerges clearly is that there will be more control, more taxes and more bureaucracy. In fact, as my right hon. Friend the Leader of the Opposition said, there will be more power to the Government and less to the citizen. However, I recognise that, far though the Government have gone, they will not go far enough to satisfy the hon. Member for Liverpool, Walton (Mr. Heffer).
One does not have to look far through the Gracious Speech to find a series of fairly empty pieties. First, we are told that the attack—so-called—on inflation will receive the highest priority. The Government should remember that they have been in office for many years since 1964, and that they share a large part of the responsibility for the troubles for which they seek to blame others. It is time that they admitted this. They have yet to tell us in this fight, as they call it, against inflation, whether there is any limit at all in their view, either in time or in amount, to the extent to which they can borrow their way out of trouble.
My hon. Friend the Member for Horsham and Crawley (Mr. Hordern), in a speech which was much curtailed, made several important points to which I hope the Chancellor will give his careful attention. He said that over the past four months the pound has been declining against the dollar at an annual rate of


over 20 per cent., and that the volume of our imports is increasing while the volume of our exports is falling. I hope that the right hon. Gentleman will give his attention and call the attention of the Prime Minister to these matters. In his public speeches at any rate, he appears to neglect them altogether.
The Gracious Speech goes on to say that the Government will continue to strive for a constitutional settlement to the problem of Northern Ireland. The Government have had and have acknowledged, considerable support from this side of the House in dealing with this agonising problem, but they should not ignore the deep anxiety which now exists about security in the Province.
The motion in the name of the hon. Member for Antrim, South (Mr. Molyneaux), couched, as it is, in restrained terms, must command the support of all thoughtful people throughout this country.
I take note of what the right hon. Member for Down, South (Mr. Powell) had to say. I must sadly observe that recent experience has taught me that I have no grounds whatever to hope—not even, as the right hon. Gentleman said, "a residual hope"—that he would find himself in the Opposition Lobby tonight.
The third point which arises in the Gracious Speech is the announcement by the Government that there will be comprehensive employment safeguards for dock workers. We are entitled to ask the Secretary of State for Employment—I am sorry to see that he is not here, although we welcomed his arrival earlier—what safeguards dock workers now lack which are available to the generality of workers.
We have reached a time when we should cease to conduct our affairs against a background that has long passed away. The old and barbaric arrangements for dock labour are gone. We now have other problems. As the hon. Member for Cornwall, North (Mr. Pardoe) pointed out, those problems are of low productivity leading to loss of trade. Yet the Government declare their intention to press on in their determination to extend not only the Dock Labour Scheme but also its physical boundaries and thus to present to one more section the power to bring the nation to its knees. No one

should ignore the fact that the impact of a strike on imported food supplies would be both immediate and total.
For those reasons we give our support to the amendment tabled in the name of the Liberal Party on this subject. Hon. Gentleman may laugh, as they always do when anyone does not agree with them, but this will not help our country to solve its problems.
I turn to the remarks made by the hon. Member for Sheffield, Attercliffe (Mr. Duffy). I want to cite four points that he made. They should be borne in mind, not merely in this House but throughout the land. He honestly attempted to touch upon our difficulties, not in any emotional way but with understanding, sympathy and intelligence. He said, first, that there was no future in Britain continuing to produce goods for which there was either a declining market or no market at all. He said that it was too easy to gloss over the fear and misery caused by unemployment. I beg Labour Members to accept that the miseries of unemployment are understood elsewhere than on their Benches and that there is deep sympathy for those miseries. We are concerned that failure by the Government to show courage in time will multiply the penalty and will make the miseries even worse than they would otherwise be.
The hon. Member for Attercliffe referred to the need to live within our means, preferably at the earliest moment. He added that if we do not, our problems will multiply, including that of unemployment. Labour Members cannot ignore the logic of what the hon. Gentleman said. He said it in a very powerful speech. I have heard him make a number of speeches. Whether or not I agree with him, he never fails to match up to the standards of courage and intelligence which we very badly need at these times.
The hon. Gentleman concluded by saying that one matter of the highest priority was that Members of Parliament should have a deeper understanding of the issues which confront us today. Looking at some right hon. and hon. Members, I echo that most deeply. There are many people in the world as a whole who are watching this country and wondering whether we shall ever emerge from our


problems. They are hoping for some signs of realism and resolution to replace the dissension and disarray which they now associate with our affairs. These people are watching this House hoping that the barren ritual argument which colours so much of our affairs will be replaced—

Mr. Ted Lead bitter: Like the right hon. Gentleman's argument.

Mr. Peyton: —by some sense of clear national purpose. The hon. Gentleman's interventions are distinguished always for one thing—the self-revelation. If, surprisingly and exceptionally, the hon. Gentleman has anything to say, I shall gladly give way.

Mr. Leadbitter: Yes, give way. [HON. MEMBERS: "Oh."] I am helping the right hon. Gentleman out, because he has been boring for 20 minutes. When the right hon. Gentleman starts to talk about what other countries think of Britain, he should consider the comments he has made tonight, because he has made the greatest contribution of all towards other people's points of view. The Government side of the House does not share his argument about other countries.

Mr. Peyton: As I understood that remark, what the hon. Gentleman said was that he thought that I had made the greatest contribution myself tonight. For that I am grateful, I suppose—in a way, because one's reception of compliments always has to be conditioned by the source.

Mr. Leadbitter: Knocking Britain.

Mr. Peyton: I am not knocking Britain. This is just the kind of cheap—

Mr. Leadbitter: The right hon. Gentleman is knocking Britain. I am helping him out.

Mr. Peyton: Let me just mention, for the education of those right hon. and hon. Members of the Labour Party who are content to listen to their opponents for a moment, an article which appeared the other day and which was written by the London correspondent of a Swiss newspaper. He suggested that this country, since the war, had suffered from the continuation of too many stuffy attitudes. Whether or not hon. Members will accept

it, he said that there was too much class arrogance on both sides of the class barrier. Interestingly enough, at the end of the article he said—it might be an oversimplification to say this—that the upper classes in this country had produced since the war only officials, no entrepreneurs; the working class had produced no labour leaders, only strike organisers.
That is the view of an outsider to this country, a fairly shrewd observer. I think it is a reasonably painful one. [Interruption.] The right hon. Gentleman the Patronage Secretary is, as I have said before, one of the most voluble Chief Whips we have ever had. We long to hear him back making speeches again, but his utterances from a sedentary position do him no credit.
The Government, facing perhaps the most serious state of affairs that has ever confronted this country in peace time, are still pretending to the majority of the nation that there is an easy way out. I do not believe there is and I do not believe that the Government will be forgiven for the lax and sloppy way in which they have shunned their duty and run away from their obligations.

Hon. Members: The right hon. Gentleman has finished five minutes early.

9.25 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): It is not like the right hon. Gentleman to run out of words, but on this occasion he has clearly done so. I shall come back to him in a moment.
I think the House would wish me to say something about devolution, which has occupied a fair amount of time during the debate. I want to make absolutely clear that we have no intention of going back on our commitment to devolution. We said in the White Paper in September last year that we should set up Scottish and Welsh Assemblies and we repeated that in the October General Election. We mean it. Some people still seem to think that we are just going through the motions. I ask them to read the White Paper on Thursday and think again.

Mr. Donald Stewart: rose—

Mr. Short: Perhaps the hon. Member will contain himself for a few moments. We are not devoting all this time and


effort to something we do not intend to happen.
I flatly reject any accusation that we are going slow on the legislative timetable for devolution. The general drift of some comments has been that the Government are deferring action on devolution and dragging the matter out as much as possible in the hope that it will go away. That is ridiculous, as anybody who reads the White Paper will see. We are not deferring action or dragging the matter out.

Mr. Donald Stewart: rose—

Mr. Short: Perhaps the hon. Member will wait until I have finished this section of my speech. If I have not covered his point, I shall give way.
The work programme of officials and Ministers has been far more intense than anything I have previously encountered. I should like to pay tribute to my officials, who have had to endure the almost killing pace that I have forced upon them. We neither hope nor believe that devolution will simply go away, and nobody should believe that the status quo is any longer an option in Scotland. This has to go ahead.
However much hon. Members may protest, they must recognise that devolution is a tremendously complicated matter involving many different aspects of Government, and it cannot be rushed. Work on the drafting of the Bill started some time ago, and a great deal of progress has been made on drafting the constitutional arrangements involved.
However, the drafting of the legislation on the functions and powers of the Assemblies has proved an enormously complex job, involving searching and, where necessary, amending United Kingdom legislation going back to the Act of Union. This section of the Bill will probably not be finished until the spring. Reluctantly, we have come to the view that its passage will inevitably take us into the next Session. There are several reasons for this, including the complications that I have just mentioned.
For example, a whole range of problems arises out of the treatment of Scottish private law. This is a candidate for devolution if anything is. It covers a wide field that interacts at many points with commercial matters such as the law

of contract, consumer protection and bankruptcies, which, within a single United Kingdom market, inevitably affect people and firms outside Scotland.
The interface between Scottish private law and United Kingdom law presents peculiarly difficult problems on which we are still carrying out an intensive study. I do not suppose that nationalist Members have given so much as a moment's thought to that aspect. When hon. Members read the White Paper on Thursday, they will readily appreciate that there are a number of similar problems, which cannot be ignored or swept under the carpet.
There is then the need for consultations with organisations that will be affected by our proposals. I do not mean general talk, because there has been plenty of that already. I mean detailed comments on the nuts and bolts of our scheme. We cannot ride roughshod over all the bodies and individuals who will be affected. They must see what is proposed and have the opportunity to say what they think of it.
We are concerned with the whole range of government. This will take time, following publication of the White Paper. Upon publication of the Bill, we expect that in the spring there will be a second stage of more definitive public consultation directed towards the specific legislative proposals.
I understand that our timetable is a great disappointment to some people. It is a disappointment to me, too. I know, however, that many of the criticisms of it come from those whose aim is not devolution but separatism. They seem not to want a completely researched proposal for devolution which has received public endorsement by consultation and debate. That would not suit their book.
They would rather see a half-baked scheme introduced immediately, one which would prove completely unsatisfactory, an unstable arrangement which they could exploit because of its deficiencies. No doubt they would then claim that devolution did not work and that the only complete solution was separation from the United Kingdom. They can pursue that course if they wish, but I am sure that the vast majority of people in Scotland and Wales will not


be deceived by their tactics. We shall not be drawn into this trap. We do not want devolution to fail. We are determined that it shall work, and work well.
Since virtually all the parties in the House have committed themselves in terms to devolution in Scotland at any rate, I trust that our future debates will be concerned not with whether there should be devolution, but with the best way of implementing it.

Mr. Donald Stewart: I do not believe that the right hon. Gentleman is one of the great obstacles in the Cabinet to devolution. The Chancellor of the Exchequer, the Home Secretary and others have been the niggers in the woodpile, if to say that is not an offence against the race relations laws. Does the right hon. Gentleman agree, regardless of the difficulties set out in the White Paper, that his time scale on his promises to the House has fallen behind? Is he not on record as saying that the Bill would start its progress through the House in November 1975?

Mr. Short: The Bill will be published next spring. I have said that the fact that it cannot get on the statute book in this Session is a great disappointment to me.

Mr. Wyn Roberts: As the White Paper has quite clearly been made available to members of the Press and to others connected with the media, will the Leader of the House consider advancing its publication date to tomorrow?

Mr. Short: I am not prepared to do that. The same procedure has been followed on this as on other occasions with other White Papers. My right hon. Friend the Prime Minister said at Question Time today that he was looking into this matter.

Mr. John Mendelson: My right hon. Friend said that he hoped that the debate from now on would centre not on whether there should be devolution, but on how it should come. Does he not agree, however, that there must be an opportunity for people in the country generally to consider the grave implications of these proposals for the unity of the United Kingdom? Does he accept that there can be no restriction whatever on the debate which must now begin?

Mr. Short: My right hon. Friend the Prime Minister has made it clear that we want a big national debate on the matter. The timetable will make that possible in two stages—a general debate on the White Paper and then a more definitive debate when the Bill is published in the spring.
I turn to the Opposition amendment. I find it hard to believe that it can possibly provide the basis for united opposition to the Government's policies among the Opposition parties. The right hon. Member for Devon, North (Mr. Thorpe) admirably summed up the feelings of many of us about the first part of the amendment in his comments on the speech made by the hon. Member for Henley (Mr. Heseltine) on the second day of the debate.
I hope that the hon. Member for Henley, who does not seem to be present, will not think me churlish if I point out that, apart from one vague reference to the repayment of tax to the successful, there were no practical suggestions of alternative policies. Nor were there any such suggestions in the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe), who opened the debate today, except for one to which I shall come. The right hon. and learned Gentleman showed himself today to be the pedlar of trifles that we have always known him to be. I very much hope that Liberal Members will follow the logic of their leader's comments by rejecting the Conservative amendment in the Division Lobby.
The truth is that the Conservative Party has no practical proposals, to use its own phrase, to solve our serious financial and economic problems. Not a glimmer of a policy has emerged in the whole five-day debate. Listening to my hon. Friend the Member for Tottenham (Mr. Atkinson) tonight, I felt that a certain section of my party was doing much better than the Opposition in proposing alternative policies. I hope that the Leader of the Opposition will be grateful to the members of that section for doing her job for her, as she is not doing it.
The only policy, if one can call it that, of the Conservatives is immediate savage cuts in public expenditure. Calls for such cuts were made in every speech. Nothing could make less economic sense than immediate savage cuts in public


expenditure, as my right hon. Friend the Chancellor of the Exchequer has consistently pointed out. If industry were in a position to employ those released from public service, if investment were high and productivity were rising, it could be argued that there was a case for such cuts. Indeed, my right hon. Friend has made it clear that, looking ahead to the prospects of an upturn in world trade, we shall bear that case in mind in considering public expenditure from 1977–78 onwards. We have already announced expenditure reductions for 1976–77, and my right hon. Friend made clear again today, in a speech which I understand had the approbation of the right hon. Member for Yeovil—

Mr. Peyton: Only the middle bit.

Mr. Short: It is the bit that I am talking about.
My right hon. Friend made it clear that substantial economies would be necessary in 1977–78 and 1978–79. That will be the time to make resources available for exports and investment, as my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said in a very good speech this evening [Interruption.] I am sure that the hon. Gentleman is my friend as well.
If we cut public expenditure now, at a time of high unemployment, in the trough of the worst world recession since the early 1930s, we should be digging a hole in our economy that nothing could fill, and so adding to unemployment and therefore to the public sector borrowing requirement. Therefore, I believe that such a course would be utterly unproductive.

Mr. Hordern: I am grateful to my right hon. Friend for giving way. I think that there must be some confusion of identity. I do not recognise my speech from the words the Lord President just read out.

Mr. Short: I left the hon. Gentleman's contribution some time ago. He was talking about the need to make expenditure cuts in the years to which I referred.
Perhaps the right hon. Lady the Leader of the Opposition, who constantly advocates cuts that would lead to high unemployment, would like to go off the country house circuit that she frequents and go to Merseyside. She will find in that area

12·1 per cent. male unemployment. Perhaps she will tell the people there about the effect of her policies on employment.
I know that the right hon. Lady is very concerned about the public sector deficit, but I would remind her that the recession hits twice—first, through the loss of tax revenues and, secondly, through claims in terms of benefits. Her policies would do nothing whatever to decrease that deficit on both grounds, or to avoid the deepening recession that we are now experiencing.
The right hon. Member for Yeovil (Mr. Peyton) always comes up with an interesting Press comment. He obviously reads all the papers and he quoted some extracts today. Did he read the Observer last Sunday with his usual diligence? If so, I would remind the House what the Observer said:
We should establish an environment of courage and self-restraint by not talking cuts and acting expenditure.
I commend that thought to the right hon. Gentleman and his right hon. Friend the Leader of the Opposition.
Perhaps they would cast their minds back to 29th January this year. On that day on the earnings rule they and their Conservative colleagues voted for increased expenditure at a cost to the Government of £60 million this year and a further £325 million over the next two years. That is what the Observer meant by
talking cuts and acting expenditure.
Again, I wish to remind the right hon. Lady the Leader of the Opposition that she and her Front Bench colleagues abstained on the issue of the 25 per cent. rate of VAT on television sets. By so doing they ensured a defeat for the Government—a defeat which over the next four or five years will cost up to £250 million. That also is
talking cuts and acting expenditure.

Sir G. Howe: Now that the Labour Government have made a modification in national insurance contributions well sufficient to cover the abolition of the earnings rule, which was widely welcomed, will the right hon. Gentleman say whether the Government intend to reverse the decision of the House and to restore the earnings rule to its former limit? Secondly, will he acknowledge that if his


right hon. Friend the Chancellor of the Exchequer had not reduced VAT from 10 to 8 per cent. to win an election, the revenue would have remained far higher?

Mr. Short: The fact remains that the additional expenditure has been put upon us by the very people who are now asking for cuts. [HON MEMBERS: "Answer."] Perhaps I could give a third example from this year. On 7th May the Opposition voted against a Government motion on defence that recognised the need
…to ensure that the level of public expenditure is contained within available resources…".
That, too, is a matter of
talking cuts and acting expenditure".
I do not wish to be unfair to the right hon. and learned Member for Surrey, East because he is not alone in his hypocrisy. He shares this record with most other Members of the Opposition Front Bench, including the right hon. Lady the Leader of the Opposition. If they wish to possess any credibility, they must be more consistent.
They were both senior members of a Government which came into office in 1970 and inherited a negative borrowing requirement—that is a surplus—of £18 million. A few months later, in October, in their White Paper "New Policies for Public Spending", they imposed the most humiliating cuts, cutting out the Consumer Council, regional development boards and imposing museum charges. When the Conservative Government left office three-and-a-quarter years later, they bequeathed to us a public sector borrowing requirement of £6,325 million. I shall not attempt to calculate the percentage increase in the borrowing requirement in those disastrous years, but the Conservatives' record has been this year, and still is, one of talking cuts and acting expenditure with a vengeance.
The right hon. Member for Down, South (Mr. Powell) in a brilliant speech—if I may say so without sounding patronising—said that the policies pursued by the previous Government were a major factor in any objective assessment of our present economic problems.

Mr. Peyton: The right hon. Gentleman is fully aware that since his Government

came into office the borrowing requirement has escalated rapidly. Will he answer the question which I asked him? Do the Government now think that there is any limit in time or amount to the extent to which they can borrow their way out of trouble?

Mr. Short: I dealt with that a few minutes ago, as the right hon. Gentleman would have heard had he been listening. Of course the public sector borrowing requirement has increased in the past 20 months. It would have been impossible to prevent the increase. It was caused, first, by the roaring inflation which the Conservatives bequeathed to us and, secondly, by the need to protect the poorest members of the community from the worst effects of inflation, particularly by increasing social benefits and by food and housing subsidies. Even in the circumstances we inherited, we have made substantial improvements in pensions and other social security benefits. We have increased benefits three times in the 18 months since we took office. We have brought the total increase in pensions and related long-term rates to about 70 per cent. Pensions are now 33 per cent. higher than they were a year earlier, and that is a much bigger increase than the rise in prices.
For the future, we have committed ourselves by law to increasing pensions in line with earnings or prices, whichever rise the faster. This month, we are introducing a new non-contributory invalidity pension, doubling the supplementary benefit disregard and increasing by 37½ per cent. the special heating addition payable with supplementary benefits, which now benefit some 700,000 people over pension age and 100,000 under pension age.
These measures reflect the priority which the Government give to improving the position for the poorest members of our society. I shall ask the right hon. Lady a question, and I shall give way to her so that she may answer it. I have read out a list of what we have done to protect the poorest members of the community. They represent one reason why the public sector borrowing requirement has risen as it has. Which of them would the right hon. Lady not have done?

Mrs. Margaret Thatcher: The Lord President got many of his facts


and figures wrong. Many of the measures to help the poorest members of the community come under the National Insurance Fund, which is paid for by the contributions of employers and employees. Many of the other measures he quoted would affect the public sector borrowing requirement much less if they were confined to the poor and were not indiscriminate. The right hon. Gentleman is paying indiscriminate subsidies to himself as well as to the poor.

Mr. Short: The right hon. Lady knows that that does not even begin to be an answer. She knows why the public sector borrowing requirement has risen.
Food subsidies would undoubtedly have been a first target for the right hon. Lady's axe. Members of the Oppositon have said so. Given the chance, the right hon. Lady would cut them at a stroke. Supposing she did so, what would happen? This year we expect to spend £550 million on food subsidies. The right hon. Lady is against subsidies. What would happen if the subsidies were dropped? I will tell her. The average family of two adults and two children would find that their weekly bill had risen by 73p. The right hon. Lady would stop food subsidies. She would put up the price of bread by 2½ p a loaf, the price of flour by 3p for a 3 lb. bag. She would add 8p on the cost of 1 lb of tea. She would put 12p on 1 lb of cheese, 2p per pint of milk, 11p on 1 lb of butter.
What about rents? Whatever the right hon. Lady did about food subsidies, she would cut council house subsidies. This is what the policy of the Opposition would mean. This is what they advocate.
If the right hon. Lady cut only this Government's increased council house subsidy, the council house dweller would be faced with an extra rent of £l·27p a week on top of the increases already experienced. Would the right hon. Lady have the nerve to ask that of a worker who settles for no more than £6 per week? I understand that the right hon. Lady supports that subsidy. Cutting out food subsidies and removing only the council house rent subsidy which we have introduced in the past 20 months would add £2 per week to the budget of the average family.

Sir G. Howe: Will the Leader of the House confirm what the Chancellor of the Exchequer and the Secretary of State for Prices and Consumer Protection have said on many occasions—that it is the policy of the Government as soon as reasonably possible to phase out the food subsidies about which the right hon. Gentleman has been making so much?

Mr. Short: We shall do so as soon as reasonably possible. But the Conservatives say that they would do so immediately.
I now turn to the amendment in the name of the right hon. Member for Devon, North and his hon. Friends. It mentions higher costs and inefficiency in the docks. I hope that the right hon. Gentleman will take a little more trouble to learn about the docks before we debate the Bill. On Monday he claimed that it was cheaper to ship tea via Hull than London. I suppose that the right hon. Gentleman does not realise that Hull is part of the existing Dock Labour Scheme. He did not know that. He speaks of increased costs, but rates of pay in non-scheme ports are settled by the normal process of collective bargaining. Those ports do not form part of the scheme and are irrelevant to the proposals for its extension. It was asserted that the gross figure of tons shifted per man-hour in Dock Labour Scheme ports is about a quarter of the figures for private enterprise ports. However, the scheme already covers many private enterprise ports. I suspect that his assertions, inaccurate on this point, will prove just as groundless as those of the right hon. Member for Lowestoft (Mr. Prior). He said that Antwerp dockers move seven times more goods per shift than London dockers.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): That was a lie.

Mr. Michael Latham: On a point of order, Mr. Speaker. Is it in order for the Patronage Secretary to use the word "lie" in the House?

Mr. Speaker: The word "lie" is un-parliamentary language.

Mr. Mellish: Further to that point of order, Mr. Speaker. I willingly withdraw the word "lie" and say that the


statement was a misconception and that the right hon. Gentleman has not had the decency to apologise.

Mr. Short: The right hon. Gentleman also had to withdraw his remarks because it was discovered that he was comparing the movement of iron bars with general cargo.
The Liberal amendment assumes that the extension of the Dock Labour Scheme to ports not already covered will lead to industrial action. There is no evidence at all for that assumption. The 1972 dock strike was, to a very large degree, the product of anomalies which our proposals seek to correct. That strike left no one in any doubt that industrial action in any or all of our ports has damaging and lasting effects. It is for this very reason that we are introducing this Bill, which is to try to prevent a similar deterioration in industrial relations in Britain's docks, exposing the country to such risks in the future. That is what the Liberals do not understand. This Bill will diminish and not increase the risks.
The Opposition accuse us of policies which increase bureaucracy and diminish freedom. But nothing they have said dur-

the course of this debate substantiates that ritual accusation. Their amendment is nothing more than a mirror of their own predicament, their lack of alternative policies, and their unconcern for the freedom and security of our people. Whose freedom will be served by immediate public expenditure cuts? Who will be freer by ensuring extra unemployment in the depths of a recession?

The problem with the right hon. Lady the Leader of the Opposition is that her definition of "freedom" is the freedom of the jungle. It is the freedom of a small group of people to jump the queue for a pay bed in a National Health Service hospital, for example. This amendment is typical of a party which, in opposition, has shown itself not as an alternative Government, but as a home for lost causes. The concern of the—

Mr. Humphrey Atkins: rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the amendment be made:—

The House divided: Ayes 280, Noes 294.

Division No. 3.]
AYES
[10.0 p.m.


Adley, Robert
Channon, Paul
Fisher, Sir Nigel


Aitken, Jonathan
Churchill, W. S.
Fletcher-Cooke, Charles


Alison, Michael
Clark, Alan (Plymouth, Sutton)
Fookes, Miss Janet


Amery, Rt Hon Julian
Clark, William (Croydon S)
Fowler, Norman (Sutton C'f'd)


Arnold, Tom
Clarke, Kenneth (Rushcliffe)
Fox, Marcus


Atkins, Rt Hon H. (Spelthorne)
Clegg, Walter
Fraser, Rt Hon H. (Stafford &amp; St)


Awdry, Daniel
Cockcroft, John
Freud, Clement


Bain, Mrs Margaret
Cooke, Robert (Bristol W)
Fry, Peter


Barker, Kenneth
Cope, John
Galbraith, Hon. T. G. D.


Banks, Robert
Cordle, John H.
Gardiner, George (Reigate)


Beith, A. J.
Cormack, Patrick
Gardner, Edward (S Fylde)


Bennett, Dr Reginald (Fareham)
Corrie, John
Gilmour, Rt Hon Ian (Chesham)


Benyon, W.
Costain, A. P.
Glyn, Dr Alan


Berry, Hon Anthony
Crawford, Douglas
Godber, Rt Hon Joseph


Biffen, John
Critchley, Julian
Goodhart, Philip


Biggs-Davison, John
Crouch, David
Goodhew, Victor


Blaker, Peter
Crowder, F. P.
Goodlad, Alastair


Body, Richard
Dean, Paul (N Somerset)
Gorst, John


Boscawen, Hon Robert
Dodsworth, Geoffrey
Gow, Ian (Eastbourne)


Bottomley, Peter
Douglas-Hamilton, Lord James
Gower, Sir Raymond (Barry)


Bowden, A. (Brighton, Kemptown)
Drayson, Burnaby
Grant, Anthony(Harrow C)


Boyson, Dr Rhodes(Brent)
du Cann, Rt Hon Edward
Gray, Hamish


Braine, Sir Bernard
Durant, Tony
Grieve, Percy


Brittan, Leon
Dykes, Hugh
Griffiths, Eldon


Brotherton, Michael
Eden, Rt Hon Sir John
Grimond, Rt. Hon J.


Brown, Sir Edward (Bath)
Edwards, Nicholas (Pembroke)
Grist, Ian


Bryan, Sir Paul
Elliott, Sir William
Hall, Sir John


Buchanan-Smith, Alick
Emery, Peter
Hall-Davis, A. G. F.


Budgen, Nick
Evans, Gwynfor (Carmarthen)
Hamilton, Michael (Salisbury)


Bulmer, Esmond
Ewing, Mrs Winifred (Moray)
Hampson, Dr Keith


Burden, F. A.
Eyre, Reginald
Hannam, John


Butler, Adam (Bosworth)
Fairbairn, Nicholas
Harvie Anderson, Rt Hon Miss


Carlisle, Mark
Fairgrieve, Russell
Hastings, Stephen


Carr, Rt Hon Robert
Farr, John
Havers, Sir Michael


Chalker, Mrs Lynda
Fell, Anthony
Hawkins, Paul




Hayhoe, Barney
Mayhew, Patrick
Sims, Roger


Heath, Rt Hon Edward
Meyer, Sir Anthony
Sinclair, Sir George


Henderson, Douglas
Miller, Hal (Bromsgrove)
Skeet, T. H. H.


Heseltine, Michael
Miscampbell, Norman
Smith, Cyril (Rochdale)


Hicks, Robert
Mitchell, David (Basingstoke)
Smith, Dudley (Warwick)


Higgins, Terence L.
Moate, Roger
Speed, Keith


Holland, Philip
Monro, Hector
Spence, John


Hordern, Peter
Montgomery, Fergus
Spicer, Jim (W Dorset)


Howe, Rt Hon Sir Geoffrey
Moore, John (Croydon C)
Spicer, Michael (S Worcester)


Howell, David (Guildford)
More, Jasper (Ludlow)
Sproat, Iain


Howell, Ralph (North Norfolk)
Morgan, Geraint
Stainton, Keith


Howells, Geraint (Cardigan)
Morris, Michael (Northampton S)
Stanbrook, Ivor


Hunt, John
Morrison, Charles (Devizes)
Stanley, John


Hurd, Douglas
Morrison, Hon Peter (Chester)
Steel, David (Roxburgh)


Hutchison, Michael Clark
Mudd, David
Steen, Anthony (Wavertree)


Irvine, Bryant Godman (Rye)
Neave, Airey
Stewart, Donald (Western Isles)


Irving, Charles (Cheltenham)
Nelson, Anthony
Stewart, Ian (Hitchin)


James, David
Neubert, Michael
Stokes, John


Jenkin, Rt Hn P. (Wanst'd &amp; W'df'd)
Newton, Tony
Stradling Thomas, J.


Jessel, Toby
Nott, John
Tapsell, Peter


Johnson Smith, G. (E Grinstead)
Onslow, Cranley
Taylor, R. (Croydon NW)


Johnston, Russell (Inverness)
Oppenheim, Mrs Sally
Taylor, Teddy (Cathcart)


Jones, Arthur (Daventry)
Osborn, John
Tebbit, Norman


Jopling, Michael
Page, John (Harrow West)
Temple-Morris, Peter


Joseph, Rt Hon Sir Keith
Page, Rt Hon R. Graham (Crosby)
Thatcher, Rt Hon Margaret


Kaberry, Sir Donald
Pardoe, John
Thomas, Dafydd (Merioneth)


Kellett-Bowman, Mrs Elaine
Pattie, Geoffrey
Thomas, Rt Hon P. (Hendon S)


Kilfedder, James
Penhaligon, David
Thompson, George


Kimball, Marcus
Percival, Ian
Thorpe, Rt Hon Jeremy (N Devon)


King, Evelyn (South Dorset)
Peyton, Rt Hon John
Townsend, Cyril D.


King, Tom (Bridgwater)
Pink, R. Bonner
Trotter, Neville


Kitson, Sir Timothy
Price, David (Eastleigh)
Tugendhat, Christopher


Knight, Mrs Jill
Prior, Rt Hon James
van Straubenzee, W. R.


Knox, David
Pym, Rt Hon Francis
Vaughan, Dr Gerard


Lamont, Norman
Raison, Timothy
Viggers, Peter


Lane, David
Rathbone, Tim
Wainwright, Richard (Colne V)


Langford-Holt, Sir John
Rawlinson, Rt Hon sir Peter
Wakeham, John


Latham, Michael (Melton)
Rees, Peter (Dover &amp; Deal)
Walder, David (Clitheroe)


Lawrence, Ivan
Rees-Davies, W. R.
Walker, Rt Hon P. (Worcester)


Lawson, Nigel
Raid, George
Walker-Smith, Rt Hon Sir Derek


Lester, Jim (Beeston)
Renton, Rt Hon Sir D. (Hunts)
Wall, Patrick


Lewis, Kenneth (Rutland)
Renton, Tim (Mid-Sussex)
Walters, Dennis


Lloyed, Ivan
Rhys Williams, Sir Brandon
Warren, Kenneth


Loveridge, John
Ridley, Hon Nicholas
Watt, Hamish


Luce, Richard
Ridsdale, Julian
Weatherill, Bernard


McAdden, Sir Stephen
Rifkind, Malcolm
Wells, John


MacCormick, lain
Rippon, Rt Hon Geoffrey
Welsh, Andrew


McCrindle, Robert
Roberts, Wyn (Conway)
Whitelaw, Rt Hon William


Macfarlane, Neil
Ross, Stephen (Isle of Wight)
Wiggin, Jerry


MacGregor, John
Rossi, Hugh (Hornsey)
Wigley, Dafydd


Macmillan, Rt Hon M. (Farnham)
Rost, Peter (SE Derbyshire)
Wilson, Gordon (Dundee E)


McNair-Wilson, M. (Newbury)
Royle, Sir Anthony
Winterton, Nicholas


McNair-Wilson, P. (New Forest)
Sainsbury, Tim
Wood, Rt Hon Richard


Madel, David
St. John-Stevas, Norman
Young, Sir G. (Ealing, Acton)


Mates, Michael
Scott, Nicholas
Younger, Hon George


Mather, Carol
Shaw, Giles (Pudsey)



Maude, Angus
Shaw, Michael (Scarborough)
TELLERS FOR THE AYES:


Maudling, Rt Hon Reginald
Shepherd, Colin
Mr. Spencer Le Marchant and


Mawby, Ray
Shersby, Michael
Mr. Cecil Parkinson.


Maxwell-Hyslop, Robin
Silvester, Fred





NOES


Abse, Leo
Bradley, Tom
Concannon, J. D.


Allaun, Frank
Bray, Dr Jeremy
Cook, Robin F. (Edin C)


Anderson, Donald
Brown, Hugh D (Provan)
Corbett, Robin


Archer, Peter
Brown, Robert C. (Newcastle W)
Cox, Thomas (Tooting)


Armstrong, Ernest
Brown, Ronald (Hackney S)
Craigen, J. M. (Maryhill)


Ashley, Jack
Buchan, Norman
Crawshaw, Richard


Ashely, Jack
Buchan, Richard
Cronin, John


Atkins, Ronald (Preston N)
Butler, Mrs Joyce (Wood Green)
Cryer, Bob


Atkinson, Norman
Callaghan, Jim (Middleton &amp; P)
Cunningham, G. (Islington S)


Bagier, Gordon A. T.
Campbell, Ian
Cunningham, Dr J (Whiteh)


Barnett, Rt Hon Joel (Heywood)
Canavan, Dennis
Dalyell, Tam


Bates, Alf
Cant, R. B.
Davidson, Arthur


Bean, R. E.
Carmichael, Neil
Davies, Denzil (Llanelli)


Benn, Rt Hon Anthony Wedgwood
Carter, Ray
Davies, Ifor (Gower)


Bennett, Andrew (Stockport N)
Carter-Jones, Lewis
Davis, Clinton (Hackney C)


Bidwell, Sydney
Cartwright, John
Deakins, Eric


Bishop, E.S.
Castle, Rt Hon Barbara
Dean, Joseph (Leeds West)


Blenkinsop, Arthur
Clemitson, Ivor
Delargy, Hugh


Boardman, H.
Cocks, Michael (Bristol S)
Dell, Rt Hon Edmund


Booth, Albert
Cohen, Stanley
Dempsey, James


Bottomley, Rt Hon Arthur
Coleman, Donald
Doig, Peter


Boyden, James (Bish Auck)
Colquhoun, Mrs Maureen
Dormand, J. D.




Douglas Mann, Bruce
Kinnock, Neil
Roberts, Gwilym (Cannock)


Duffy, A. E. P.
Lamborn, Harry
Robertson, John (Paisley)


Dunn, James A.
Lamond, James
Roderick, Caerwyn


Dunnett, Jack
Latham, Arthur (Paddington)
Rodgers, George (Chorley)


Dunwoody, Mrs Gwyneth
Leadbitter, Ted
Rodgers, William (Stockton)


Eadie, Alex
Lee, John
Rooker, J. W.


Edge, Geoff
Lestor, Miss Joan (Eton &amp; Slough)
Rose, Paul B.


Edwards, Robert (Wolv SE)
Lever, Rt Hon Harold
Ross, Rt Hon W. (Kilmarnock)


Ellis, Tom (Wrexham)
Lewis, Arthur (Newham N)
Rowlands, Ted


English, Michael
Lewis, Ron (Carlisle)
Sedgemore, Brian


Ennals, David
Lipton, Marcus
Selby, Harry


Evans, Fred (Caerphilly)
Litterick, Tom
Shaw, Arnold (Ilford South)


Evans, Ioan (Aberdare)
Loyden, Eddie
Sheldon, Robert (Ashton-u-Lyne)


Evans, John (Newton)
Luard, Evan
Shore, Rt Hon Peter


Ewing, Harry (Stirling)
Lyon, Alexander (York)
Short Rt Hon E. (Newcastle C)


Fernyhough, Rt Hon E.
McCartney, Hugh
Short, Mrs Renée(Wolv NE)


Fitch, Alan (Wigan)
McElhone, Frank
Silkin, Rt Hon John (Deptford)


Fitt, Gerard (Belfast W)
MacFarquhar, Roderick
Silkin, Rt Hon S. C. (Dulwich)


Flannery, Martin
McGuire, Michael (Ince)
Sillars, James


Fletcher, Raymond (Ilkeston)
Mackenzie, Gregor
Skinner, Dennis


Fletcher, Ted (Darlington)
Mackintosh, John P.
Small, William


Foot, Rt Hon Micheal
Maclennan, Robert
Smith, John (N Lanarkshire)


Ford, Ben
McMillan, Tom (Glasgow C)
Snape, Peter


Forrester, John
McNamara, Kevin
Spearing, Nigel


Fowler, Gerald (The Wrekin)
Madden, Max
Spriggs, Leslie


Fraser, John (Lambeth, n'w'd)
Magee, Bryan
Stallard, A. W.


Freeson, Reginald
Maguire, Frank (Fermanagh)
Stewart, Rt Hon M. (Fulham)


Garrett, John (Norwich S)
Mahon, Simon
Stoddart, David


Garrett, W. E. (Wallsend)
Mallalieu, J. P. W.
Stonehouse, Rt Hon John


George, Bruce
Marks, Kenneth
Stott, Roger


Gilbert, Dr John
Marquand, David
Strang, Gavin


Ginsburg, David
Marshall, Dr Edmund (Goole)
Strauss, Rt Hon G. R.


Golding, John
Marshall, Jim (Leicester s)
Summerskill, Hon Dr Shirley


Gourlay, Harry
Mason, Rt Hon Roy
Swain, Thomas


Graham, Ted
Maynard, Miss Joan
Taylor, Mrs. Ann (Bolton W)


Grant, George (Morpeth)
Meacher, Michael
Thomas, Jeffrey (Abertillery)


Grant, John (Islington C)
Mellish, Rt Hon Robert
Thomas, Mike (Newcastle E)


Grocott, Bruce
Mendelson, John
Thomas, Ron (Bristol NW)


Hamilton, James (Bothwell)
Mikardo, Ian
Thorne, Stan (Preston South)


Hamilton, W. W. (central Fife)
Millan, Bruce
Tierney, Sydney


Hardy, Peter
Miller, Mrs Millie (Ilford N)
Tinn, James


Harper, Joseph
Mitchell, R. C. (Soton, Itchen)
Tomlinson, John


Harrison, Walter (Wakefield)
Molloy, William
Tomney, Frank


Hart, Rt Hon Judith
Moonman, Eric
Torney, Tom


Hattersley, Rt Hon Roy
Morris, Alfred (Wythenshawe)
Tuck, Raphael


Hatton, Frank
Morris, Charles R. (Openshaw)
Urwin, T. W.


Hayman, Mrs Helene
Morris, Rt Hon J (Aberavon)
Varley, Rt Hon Eric G.


Healey, Rt Hon Denis
Moyle, Roland
Wainwright, Edwin (Dearne V)


Heffer, Eric S.
Mulley, Rt Hon Frederick
Walden, Brian (B'ham, L'dyw'd)


Hooley, Frank
Murray, Rt Hon Ronald King
Walker, Harold (Doncaster)


Horam, John
Newens, Stanley
Walker, Terry (Kingswood)


Howell, Denis (B'ham, Sm H)
Noble, Mike
Ward, Micheal


Hoyle, Doug (Nelson)
Oakes, Gordon
Watkins, David


Huckfield, Les
Ogden, Eric
Watkinson, John


Hughes, Rt Hon C. (Anglesey)
O' Halloran, Micheal
Weetch, Ken


Hughes, Mark (Durham)
O'Malley, Rt Hon Brain
Weitzman, David


Hughes, Robert (Aberdeen N)
Orbach, Maurice
Wellbeloved, James


Hughes, Roy (Newport)
Orme, Rt Hon Stanley
White, Frank R. (Bury)


Hunter, Adam
Ovenden, John
White, James (Pollok)


Irvine, Rt Hon Sir A. (Edge Hill)
Owen, Dr David
Whitehead, Phillip


Irving, Rt Hon S. (Dartford)
Padley, Walter
Whitlock, William


Jackson, Colin (Brighouse)
Palmer, Arthur
Willey, Rt Hon Frederick


Janner, Greville
Park, George
Williams, Alan (Swansea W)


Jay, Rt Hon Douglas
Parker, John
Williams, Alan Lee (Hornch'ch)


Jeger, Mrs Lena
Parry, Robert
Williams, Rt Hon Shirley (Hertford)


Jenkins, Hugh (Putney)
Pavitt, Laurie
Williams, W. T. (Warrington)


Jenkins, Rt Hon Roy (Stechford)
Peart, Rt Hon Fred
Wilson, Alexander (Hamilton)


John, Brynmor
Perry, Earnest
Wilson, Rt Hon. H. (Huyton)


Johnson, Walter (Derby S)
Phipps, Dr Colin
Wilson, William (Coventry SE)


Jones, Alec (Rhondda)
Prentice, Rt Hon Reg
Wise, Mrs Audrey


Jones, Barry (East Flint)
Prescott, John
Woodall, Alec


Jones, Dan (Burnley)
Price, C. (Lewisham W)
Woof, Robert


Judd, Frank
Price, William (Rugby)
Wrigglesworth, Ian


Kaufman, Gerald
Radice, Giles
Young, David (Bolton E)


Kelley, Richard
Rees, Rt Hon Merlyn (Leeds S)
TELLERS FOR THE NOES:


Kerr, Russell
Richardson, Miss Jo
Mr. John Ellis and


Kilroy-Silk, Robert
Roberts, Albert (Normanton)
Miss Margaret Jackson.

Question accordingly negatived

Mr. Speaker: I now call the right hon. Member for Devon, North (Mr. Thorpe) formally to move his amendment.

Amendment proposed: At end of Question, add—
But humbly regret that the Gracious Speech contains proposals for the docks which, if carried out by an extension of the areas covered by the National Dock Labour Scheme.

will lead to further unemployment in those areas, further strangulation of Great Britain's successful ports and higher costs and inefficiency.—[Mr. Thorpe.]

Question put forthwith pursuant to the Order of the House this day, That the amendment be made:—

The House divided: Ayes 288, Noes 294.

Division No. 4.]
AYES
[10.17 p.m.


Adley, Robert
Eyre, Reginald
Kimball, Marcus


Aitken, Jonathan
Fairbairn, Nicholas
King, Evelyn (South Dorset)


Alison, Michael
Fairgrieve, Russell
King, Tom (Bridgwater)


Amery, Rt Hon Julian
Farr, John
Kitson, Sir Timothy


Arnold, Tom
Fell, Anthony
Knight, Mrs Jill


Atkins, Rt Hon H. (Spelthorne)
Fisher, sir Nigel
Knox, David


Awdry, Daniel
Fletcher-Cooke, Charles
Lamont, Norman


Bain, Mrs Margaret
Fookes, Miss Janet
Lane, David


Baker, Kenneth
Fowler, Norman (Sutton C'f'd)
Langford-Holt, Sir John


Banks, Robert
Fox, Marcus
Latham, Michael (Melton)


Beith. A. J.
Fraser, Rt Hon H. (Stafford &amp; St)
Lawrence, Ivan


Bennett, Dr Reginald (Fareham)
Freud, Clement
Lawson, Nigel


Benyon, W.
Fry, Peter
Le Marchant, Spencer


Berry, Hon Anthony
Galbraith, Hon. T. G. D.
Lester, Jim (Beeston)


Biffen, John
Gardiner, George (Reigate)
Lewis, Kenneth (Rutland)


Biggs-Davison, John
Gardner, Edward (S Fylde)
Lloyd, Ian


Blaker, Peter
Gilmour, Rt Hon Ian (Chesham)
Loveridge, John


Body, Richard
Glyn, Dr Alan
Luce, Richard


Boscawen, Hon Robert
Godber, Rt Hon Joseph
McAdden, Sir Stephen


Bottomley, Peter
Goodhart, Philip
MacCormick, Iain


Bowden, A. (Brighton, Kemptown)
Goodhew, Victor
McCrindle, Robert


Boyson, Dr Rhodes(Brent)
Goodlad, Alastair
McCusker, H.


Bradtord, Rev Robert
Gorst, John
Macfarlane, Neil


Braine, Sir Bernard
Gow, Ian (Eastbourne)
MacGregor. John


Brittan, Leon
Gower, Sir Raymond (Barry)
Macmillan, Rt Hon M. (Farnham)


Brotherton, Michael
Grant, Anthony (Harrow C)
McNair-Wilson, M. (Newbury)


Brown, Sir Edward (Bath)
Gray, Hamish
McNair-Wilson, P. (New Forest)


Bryan, Sir Paul
Grieve, Percy
Madel, David


Buchanan-Smith, Alick
Griffiths, Eldon
Mates, Michael


Budgen, Nick
Grimond, Rt Hon J.
Mather, Carol


Bulmer, Esmond
Grist, Ian
Maude, Angus


Burden, F. A.
Hall, Sir John
Maulding, Rt Hon Reginald


Butler, Adam (Bosworth)
Hall-Davis, A. G. F.
Mawby, Ray


Carlisle, Mark
Hamilton, Michael (Salisbury)
Maxwell-Hyslop, Robin


Carr, Rt Hon Robert
Hampson, Dr Keith
Mayhew, Patrick


Carson, John
Hannam, John
Meyer, Sir Anthony


Chalker, Mrs Lynda
Harvie Anderson, Rt Hon Miss
Miller, Hal (Bromsgrove)


Channon, Paul
Hastings, Stephen
Miscampbell, Norman


Churchill, W. S.
Havers, Sir Michael
Mitchell, David (Basingstoke)


Clark, Alan (Plymouth, Sutton)
Hawkins, Paul
Moate, Roger


Clark, William (Croydon S)
Hayhoe, Barney
Molyneaux, James


Clarke, Kenneth (Rushcliffe)
Heath, Rt Hon Edward
Monro, Hector


Clegg, Walter
Henderson, Douglas
Montgomery, Fergus


Cockcroft, John
Heseltine, Michael
Moore, John (Croydon C)


Cooke, Robert (Bristol W)
Hicks, Robert
More, Jasper (Ludlow)


Cope, John
Higgins, Terence L.
Morgan, Geraint


Cordle, John H.
Holland, Philip
Morris, Michael (Northampton S)


Cormack, Patrick
Hordern, Peter
Morrison, Charles (Devizes)


Corrie, John
Howe, Rt Hon Sir Geoffrey
Morrison, Hon Peter (Chester)


Costain, A. P.
Howell, David (Gulldford)
Mudd, David


Crawford, Douglas
Howell, Ralph (North Norfolk)
Neave, Airey


Critchley, Julian
Howells, Geraint (Cardigan)
Nelson, Anthony


Crouch, David
Hunt, John
Neubert, Michael


Crowder, F. P.
Hurd, Douglas
Newton, Tony


Dean, Paul (N Somerset)
Hutchison, Micheal Clark
Nott, John


Dodsworth, Geoffrey
Irvine, Bryant Godman (Rye)
Onslow, Cranley


Douglas-Hamilton, Lord James
Irving, Charles (Cheltenham)
Oppenheim, Mrs Sally


Drayson, Burnaby
James, David
Osborn, John


du Cann, Rt Hon Edward
Jenkin, Rt Hn P. (Wanst'd &amp; W'df'd)
Page, John (Harrow West)


Dunlop, John
Jessel, Toby
Page, Rt Hon R. Graham (Crosby)


Durant, Tony
Johnson Smith, G. (E Grinslead)
Paisley, Rev Ian


Dykes, Hugh
Johnston, Russeil (Inverness)
Parkinson, Cecil


Eden, Rt Hon Sir John
Jones, Arthur (Daventry)
Pattie, Geoffrey


Edwards, Nicholas (Pembroke)
Jopling, Michael
Penhaligon, David


Elliott, Sir William
Joseph, Rt Hon Sir Keith
Percival, Ian


Emery, Peter
Kaberry, Sir Donald
Peyton, Rt Hon John


Evans, Gwynfor (Carmarthen)
Kellett-Bowman, Mrs Elaine
Pink, R. Bonner


Ewing, Mrs Winifred (Moray)
Kilfedder, James
Powell, Rt Hon J. Enoch




Price, David (Eastleigh)
Silvester, Fred
Townsend, Cyril D.


Prior, Rt Hon James
Sims, Roger
Trotter, Neville


Pym, Rt Hon Francis
Sinclair, Sir George
Tugendhat, Christopher


Raison, Timothy
Skeet, T. H. H.
van Straubenzee, W. R.


Rathbone, Tim
Smith, Dudley (Warwick)
Vaughan, Dr Gerard


Rawlinson, Rt Hon Sir Peter
Speed, Keith
Viggers, Peter


Rees, Peter (Dover &amp; Deal)
Spence, John
Wainwright, Richard (Colne V)


Rees-Davies, W. R.
Spicer, Jim (W Dorset)
Wakeham, John


Reid, George
Spicer, Michael (S Worcester)
Walder, David (Clitheroe)


Renton, Rt Hon Sir D. (Hunts)
Sproat, lain
Walker, Rt Hon P. (Worcester)


Renton, Tim (Mid-Sussex)
Stainton, Keith
Walker-Smith, Rt Hon Sir Derek


Rhys Williams, Sir Brandon
Stanbrook, Ivor
Wall, Patrick


Ridley, Hon Nicholas
Stanley, John
Walters, Dennis


Ridsdale, Julian
Steel, David (Roxburgh)
Warren, Kenneth


Rifkind, Malcolm
Steen, Anthony (Wavertree)
Watt, Hamish


Rippon, Rt Hon Geoffrey
Stewart, Donald (Western Isles)
Weatherill, Bernard


Roberts, Wyn (Conway)
Stewart, Ian (Hitchin)
Wells, John


Ross, Stephen (Isle of Wight)
Stokes, John
Welsh, Andrew


Ross, William (Londonderry)
Stradling Thomas, J.
Whitelaw, Rt Hon William


Rossi, Hugh (Hornsey)
Tapsell, Peter
Wiggin, Jerry


Rost, Peter (SE Derbyshire)
Taylor, R. (Croydon NW)
Wigley, Dafydd


Royle, Sir Anthony
Taylor, Teddy (Cathcart)
Wilson, Gordon (Dundee E)


Sainsbury, Tim
Tebbit, Norman
winterton, Nicholas


St. John-Stevas, Norman
Temple-Morris, Peter
Wood, Rt Hon Richard


Scott, Nicholas
Thatcher, Rt Hon Margaret
Young, Sir G. (Ealing, Acton)


Shaw, Giles (Pudsey)
Thomas, Dafydd (Merioneth)
Younger, Hon George


Shaw, Michael (Scarborough)
Thomas, Rt Hon P. (Hendon S)
TELLERS FOR THE AYES:


Snepherd, Colin
Thompson, George
Mr. Cyril Smith and


Shersby, Michael
Thorpe, Rt Hon Jeremy (N Devon)
Mr. John Pardoe




NOES


Abse, Leo
Cunningham, Dr J (Whiteh)
Harper, Joseph


Allaun, Frank
Dalyell, Tam
Harrison, Walter (Wakefield)


Anderson, Donald
Davidson, Arthur
Hart, Rt Hon Judith


Archer, Peter
Davies, Denzil (Llanelli)
Hattersley, Rt Hon Roy


Armstrong, Ernest
Davies, Ifor (Gower)
Hatton, Frank


Ashley, Jack
Davis, Clinton (Hackney C)
Hayman, Mrs Helene


Ashton, Joe
Deakins, Eric
Healey, Rt Hon Denis


Atkins, Ronald (Preston N)
Dean, Joseph (Leeds West)
Heffer, Eric S.


Atkinson, Norman
Delargy, Hugh
Hooley, Frank


Bagier, Gordon A. T.
Dell, Rt Hon Edmund
Horam, John


Barnett, Rt Hon Joel (Heywood)
Dempsey, James
Howell, Denis (B'ham, Sm H)


Bates, Alf
Doig, Peter
Hoyle, Doug (Nelson)


Bean, R. E.
Douglas-Mann, Bruce
Huckfield, Les


Benn, Rt Hon Anthony Wedgwood
Duffy, A. E. P.
Hughes, Rt Hon C. (Anglesey)


Bennett, Andrew (Stockport N)
Dunn, James A.
Hughes, Mark (Durham)


Bidwell, Sydney
Dunnett, Jack
Hughes, Robert (Aberdeen N)


Bishop, E. S.
Dunwoody, Mrs Gwyneth
Hughes, Roy (Newport)


Blenkinsop, Arthur
Eadie, Alex
Hunter, Adam


Boardman, H.
Edge, Geoff
Irvine, Rt Hon Sir A. (Edge Hill)


Booth, Albert
Edwards, Robert (Wolv SE)
Irving, Rt Hon S. (Dartford)


Bottomley, Rt Hon Arthur
Ellis, John (Brigg &amp; Scun)
Jackson, Colin (Brighouse)


Boyden, James (Bish Auck)
Ellis, Tom (Wrexham)
Jackson, Miss Margaret (Lincoln)


Bradley, Tom
English, Michael
Janner, Greville


Bray, Dr Jeremy
Ennals, David
Jay, Rt Hon Douglas


Brown, Hugh D (Provan)
Evans, Fred (Caerphilly)
Jeger, Mrs Lena


Brown, Robert C. (Newcastle W)
Evans, Ioan (Aberdare)
Jenkins, Hugh (Putney)


Brown, Ronald (Hackney S)
Evans, John (Newton)
Jenkins, Rt Hon Roy (Stechford)


Buchan, Norman
Ewing, Harry (Stirling)
John, Brynmor


Buchanan, Richard
Fernyhough, Rt Hon E.
Johnson, Walter (Derby S)


Butler, Mrs Joyce (Wood Green)
Fitch, Alan (Wigan)
Jones, Alec (Rhondda)


Callaghan. Jim (Middleton &amp; P)
Fitt, Gerard (Belfast W)
Jones, Barry (East Flint)


Campbell, Ian
Flannery, Martin
Jones, Dan (Burnley)


Canavan, Dennis
Fletcher, Raymond (Ilkeston)
Judd, Frank


Cant, R. B.
Fletcher, Ted (Darlington)
Kaufman, Gerald


Carmichael, Neil
Foot, Rt Hon Michael
Kelley Richard,


Carter, Ray
Ford, Ben
Kerr, Russell


Carter-Jones, Lewis
Forrester, John
Kilroy-Silk, Robert


Cartwright, John
Fowler, Gerald (The Wrekin)
Kinnock, Neil


Castle, Rt Hon Barbara
Fraser, John (Lambeth, N'w'd)
Lamborn, Hary


Clemitson, Ivor
Freeson, Reginald
Lamond, James


Cocks, Michael (Bristol S)
Garrett, John (Norwich S)
Latham, Arthur (Paddington)


Cohen, Stanley
Garrett, W. E. (Wallsend)
Leadbitter, Ted


Coleman, Donald
George, Bruce
Lee, John


Colquhoun, Mrs Maureen
Gilbert, Dr John
Lestor, Miss Joan (Eton &amp; Slough)


Concarmon, J. D.
Ginsburg, David
Lever, Rt Hon Harold


Cook, Robin F. (Edin C)
Golding, John
Lewis, Arthur (Newham N)


Corbett, Robin
Gourlay, Harry
Lewis, Ron (Carlisle)


Cox, Thomas (Tooting)
Graham, Ted
Lipton, Marcus


Craigen, J. M. (Maryhill)
Grant, George (Morpeth)
Litterick, Tom


Crawshaw, Richad
Grant, John (Islington C)
Loyden, Eddie


Cronin, John
Grocott, Bruce
Luard, Evan


Cryer, Bob
Hamilton, W. W. (Central Fife)
Lyon, Alexander (York)


Cunningham, G. (Islington S)
Hardy, Peter
McCartney, Hugh




McElhone, Frank
Park, George
Strauss, Rt Hon G. R.


MacFarquhar, Roderick
Parker, John
Summerskill, Hon Dr Shirley


McGuire, Michael (Ince)
Parry, Robert
Swain, Thomas


Mackenzie, Gregor
Pavitt, Laurie
Taylor, Mrs. Ann (Bolton W)


Mackintosh, John P.
Peart, Rt Hon Fred
Thomas, Jeffrey (Abertillery)


Maclennan, Robert
Perry, Ernest
Thomas, Mike (Abertillery)


McMillan, Tom (Glasgow C)
Phipps, Dr Colin
Thomas, Ron (Bristol NW)


McNamara, Kevin
Prentice, Rt Hon Reg
Thorne, Stan (Preston South)


Madden, Max
Prescott, John
Tierney, Sydney


Magee, Bryan
Price, C. (Lewisham W)
Tinn, James


Maguire, Frank (Fermanagh)
Price, William (Rugby)
Tomlinson, John


Mahon, Simon
Radice, Giles
Tomney, Frank


Mallalieu, J. P. W.
Rees, Rt Hon Merlyn (Leeds S)
Torney, Tom


Marks, Kenneth
Richardson, Miss Jo
Tuck, Raphael


Marquand, David
Roberts, Albert (Normanton)
Urwin, T. W.


Marshall, Dr Edmund (Goole)
Roberts, Gwilym (Cannock)
Varley, Rt Hon Eric G.


Marshall, Jim (Leicester S)
Robertson, John (Paisley)
Wainwright, Edwin (Dearne V)


Mason, Rt Hon Roy
Roderick, Caerwyn
Walden, Brian (B'ham, L'dyw'd)


Maynard, Miss John
Rodgers, George (Chorley)
Walker, Harold (Doncaster)


Meacher, Michael
Rodgers, William (Stockton)
Walker, Terry (Kingswood)


Mellish, Rt Hon Robert
Rooker, J. W.
Ward, Michael


Mendelson, John
Rose, Paul B.
Watkins, David


Mikardo, Ian
Ross, Rt Hon W. (Kilmarnock)
Watkinson, John


Millan, Bruce
Rowlands, Ted
Weetch, Ken


Miller, Mrs Millie (Ilford N)
Sedgemore, Brian
Weitzman, David


Mitchell, R. C. (Soton, Itchen)
Selby, Harry
Wellbeloved, James


Molloy, William
Shaw, Arnold (Ilford South)
White, Frank R. (Bury)


Moonman, Eric
Sheldon, Robert (Ashton-u-Lyne)
White, James (Pollok)


Morris, Alfred (Wythenshawe)
Shore, Rt Hon Peter
Whitehead, Phillip


Morris, Charles R. (Openshaw)
Short, Rt Hon E. (Newcastle C)
Whitlock, William


Morris, Rt Hon J. (Aberavon)
Short, Mrs Renee(Wolv NE)
Willey, Rt Hon Frederick


Moyle, Roland
Silkin, Rt Hon John (Deptford)
Williams, Alan (Swansea W)


Mulley, Rt Hon Frederick
Silkin, Rt Hon S. C. (Dulwich)
Williams, Alan Lee (Hornch'ch)


Murray, Rt Hon Ronald King
Sillars, James
Williams, Rt Hon Shirley (Hertford)


Newens, Stanley
Skinner, Dennis
Williams, W. T. (Warrington)


Noble, Mike
Small, William
Wilson, Alexander (Hamilton)


Oakes, Gordon
Smith, John (N Lanarkshire)
Wilson, Rt Hon H. (Huyton)


Ogden, Eric
Snape, Peter
Wilson, William (Coventry SE)


O'Halloran, Michael
Spearing, Nigel
Wise, Mrs Audrey


O'Malley, Rt Hon Brian
Spriggs, Leslie
Woodall, Alec


Orbach, Maurice
Stallard, A. W.
woof, Robert


Orme, Rt Hon Stanley
Stewart, Rt Hon M. (Fulham)
Wrigglesworth, Ian


Ovenden, John
Stoddart, David
Young, David (Bolton E)


Owen, Dr David
Storehouse, Rt Hon John
TELLERS FOR THE NOES


Padley, Walter
Stott, Roger
Mr. J. D. Dormand and


Palmer, Arthur
Strang, Gavin
Mr. James Hamilton.

Question accordingly negatived

Main Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, as follows:—
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

FRESHWATER AND SALMON FISHERIES (SCOTLAND) BILL

Order for Second Reading read.

Ordered,

That the Bill be referred to the Scottish Grand Committee.—[Mr. Coleman.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]

Orders of the Day — DRAMA SCHOOLS

10.33 p.m.

Mr. William van Straubenzee: I am very grateful, Mr. Speaker, for the opportunity that you have kindly given me to raise for a few minutes a question which is of great interest to those immediately concerned with it—namely, professional training for drama. I am equally grateful to the Under-Secretary for being present tonight—at short notice I think I am correct in saying—I am, therefore, the more appreciative of his presence. I want to centre the few moments that I have upon a report commissioned by the Calouste Gulbenkian Foundation on professional training for drama, which is known as "Going on the Stage".
This is by no means the first time that the House and the country generally have had reason to be grateful to the Foundation for looking closely at one particular aspect of our cultural life. When I was at the Department in 1971, I received an interesting report from the Foundation on music and musical education. Although we did not follow everything in the report, it was very helpful and led to considerable additional expenditure on musical education.
I had something to do with encouraging the Foundation in the present inquiry and I am grateful to it. At a time when the Minister is under considerable financial constraints—as would be any alternative Government—it is not realistic to press for substantial increases in expenditure. I am precluded by the rules of debate from pressing for any changes in legislation, and I should not wish to do so.
I emphasise that the report does not seek to get the Minister to increase expenditure substantially. It starts from the basis of what can be done with existing resources. It is that—rather than a visionary plan—that confronts the Minister, and I hope that he will let us have at least his preliminary reactions to it. The report was commended in a leader in The Times Education Supplement on 26th August which said it avoided
all the expensive Utopian solutions.
The Minister and I have both seen reports that fell into that trap. I hope that he feels that this report has avoided it.
It could be argued that, at a time of economic difficulty, little or no money should be spent on education in the theatre. I reject that for two reasons. First, the theatre is part of our national heritage and is a great aspect of our national life. The quality of our actors and actresses and the excellence of our stage management and production are the envy of the world. If, as I believe, it can be said that London is the music capital of the world, it can also be claimed that London is the theatrical capital of the world. It is a very important part of our national heritage that we continue and nourish this great tradition.
The second reason is that it is good export business. One has only to look at the number of productions on Broadway to see the export potential of the British theatre. We are extremely fortunate to have the fortune of our language. Tours such as the recent one to India by the New English Shakespeare Company take our language and heritage all over the world. So, even leaving aside the cultural argument, which the Minister and I would rate as being of great importance, there is something here in terms of hard cash.
But, as the report shows, there are problems. We are overproducing actors. It is not possible to assess this as a measure of the unemployment, but unemployment there certainly is. There is evidence that those trained at the leading drama schools stand a better chance of a more rewarding employment than those who are trained at one of the lesser-known schools. Hence the report comes to the conclusion that the present support


from public funds, which is not inconsiderable, is uneconomic and inadequate.
Much trouble and care has been taken over this report. It leads to the view that drama schools should obtain formal recognition as a prerequisite of support and that such support should then be confined to schools that have obtained that recognition. I hope that the Minister has noticed the view that the most likely source of support for such drama schools is the local authority.
I remember that when I was in the Department of Education the Department understandably, had reservations about direct grant institutions. I can see the anxieties that they can cause if there is to be proper watchfulness and care. That leads me to hope that the hon. Gentleman will approve of what is said about support by local authorities.
I hope that he will agree that there should be a national council for drama training to oversee the whole of these activities, to advise, to guide and generally to co-ordinate. I like the concept in the report that at least six of the schools should be in the regions. I think we are agreed that too much is concentrated in the metropolis, and it would be good to get as much as possible out to the circumference. It looks as though there will be four "guaranteed" schools in London with hope for others.
The hope is expressed that the Department will issue guidance and that grants henceforward, remaining discretionary, will be slanted towards those institutions approved by the council. This concept is well understood by the Department and has been used on previous occasions. I liked the argument that there was no real case for standardisation. I feel that we benefit in our arts by a variety. I recall the previous Foundation report which called for a conservatoire of music. We rejected that because we felt that on the whole there was a greater benefit from the variety of the Royal Academy of Music and the Royal College of Music, whch are such great attributes of our musical life. It would be unwise to have that centralisation here, although perhaps there should be greater emphasis upon training in television and closer links, therefore, with the BBC and independent television.
Perhaps one of the most potent recommendations is that Equity, which is one of the interests which has kept closely in touch throughout, should be asked to grant automatic membership to those who have come from one of the schools that have achieved recognition. That would be an extremely significant factor.
It is understandable that the committee is very critical of the conditions in some of our drama schools. The Minister has much experience in this direction. I cast my mind back to my early experiences and visits to that very memorable organisation the London Academy of Music and Dramatic Art, which has one of the most beautiful small experimental theatres in London and which, in physical conditions well below the standard that we expect and regard as proper in our public provision, trains actors and actresses and those associated with them in brilliant ways. I recall being taken round by the former director, Mr. Norman Ayrton, who contributed so greatly to the training of many actors and actresses, with excellent results, and being impressed by what was achieved in poor physical surroundings.
I end with a quotation from an interesting comment on the report by Mr. Michael Billington, whom many of us read with profit, in The Guardian on 25th August. He described the English attitude to acting as
the notion that it is really a profession for semi-literate oafs and that any attempt to apply to it discipline, rigour or academic method is somehow a betrayal of its randon, roistering charm.
I hope that it will never lose its" random, roistering charm", but it will be greatly to the benefit of the nation if we can slightly and gently tighten up the professionalism of its training.
The report has done a great deal to draw the matter to our attention. I hope that the Minister, even though he speaks at short notice, will be able at least to give a cautious welcome to what the report says. My object is achieved if I have been able to draw attention to what it has to say to us.

10.47 p.m.

The Under-Secretary of State for Education and Science (Mr. Hugh Jenkins): I congratulate the hon. Member for Wokingham (Mr. van Straubenzee) not only on his selection of the subject for


this debate, but on the manner in which he has spoken. His interest in the subject is of long standing. It is possibly almost as long-standing as my own. Although I am here at short notice, as the hon. Gentleman said, I am in no way reluctantly here. It is a subject close to my heart, and therefore I regard it as a privilege to be able to reply to a speech made in such moderate and convincing terms.
I welcome the opportunity which the debate gives us to consider a matter which has caused concern for a number of years. In a minute or two I shall say something about the excellent report "Going on the Stage". I am glad that the subject has been raised so soon after its publication, so that it should not have been put on one side and become dusty on the shelves before we had an opportunity to consider it.
Before I say something about the report and its recommendations, I shall try to respond to the hon. Gentleman's invitations. I think that it will be generally agreed that, as I think is the implication of the report, there are rather more than a dozen principal schools of the type commonly known as drama schools—that is, schools, concerned for the most part with vocational training. These are pretty well known. There are a number of others whose names are less well known.
There are many performers who enter acting without first having undergone training at a drama school. But the development of the theatre means possibly a greater requirement for training in future than has been the case in the past. The picture of a largely vocational training provides a contrast with other disciplines for which provision is made in publicly maintained colleges.
In drama, and to a lesser extent in music, a different pattern has developed, with independent colleges more prominent and giving greater emphasis to vocational training than to courses of an academic nature. The difference is associated with the fact that until recently drama has not been seen as an art form requiring the support and encouragement of the State in the same sense as the visual arts and music. Indeed, the stage first established itself as in need of support via opera and ballet. It is not surprising that what has

been seen as an area for the entrepreneur or impresario should be among the last to turn to the State for greater support of its training systems.
As the hon. Member for Wokingham has properly said, public funds already make an important contribution to drama training in two ways. First, five drama schools are maintained or grant aided by local education authorities and another by the City of London Corporation. Secondly, students at both publicly supported and independent drama schools may receive discretionary awards from their local education authorities. My Department does not itself collect information about the extent of discretionary support for drama students, but I was interested to see in the Gulbenkian Report that 63 per cent. of students were thought to receive discretionary awards.
If we take the maintenance of institutions and student awards together, it adds up to a fair measure of public support for professional training for the stage. I take the view that what the Gulbenkian report found was an underestimate and that the figure may well be substantially more than a figure of 63 per cent., which is tentatively given in the report.
Despite this, those of us involved with the theatre have been well aware for some time that some of the independent schools are in financial difficulty, partly as a result of inflation and more recently perhaps because of pressures on local authority expenditure. For many years there has also been concern about the employment prospects for drama students in the acting profession. Indeed, it would be surprising if Equity did not see in the inquiry a possible means, if not of closing the shop door, at least of narrowing the opening so that entry into the profession is reduced to manageable proportions. I join the hon. Gentleman in welcoming the report.
These matters were no doubt in the minds of those who—wisely, I believe—decided that a survey of drama training was required. Tonight I shall concentrate not so much on employment matters as on the drama schools which are of concern to my right hon. Friend and to my noble Friend and myself. Their difficulties have been the subject of exchanges with the Department of Education and


Science on a number of occasions in recent years. The report "Going on the Stage", sponsored by the Gulbenkian Foundation, provides an excellent basis for a further look at the problem.
I am sure that all those who are concerned with the state of the theatre, in the profession, the drama schools and elsewhere would wish to join me in expressing our gratitude to the Foundation for sponsoring this inquiry. It is by no means the first occasion on which the Gulbenkian Foundation has made a significant contribution to the development of the arts in this country and I am sure that it will not be the last. We are indebted to it.
Perhaps I should preface my comments on the report by emphasising that it comes from an independent inquiry. It was not commissioned by the Government and there is therefore no commitment on my right hon. Friend to adopt any recommendations made. It is being carefully studied by my Department in so far as it concerns us. Many of the suggestions made are directed at others, such as the drama schools themselves, the acting profession and local education authorities. The report comments on stage schools—that is, schools of varying kinds which provide training in acting skills for children.
There are particular problems about the position of these schools in the drama training system, and these might well benefit from further investigation. But I do not propose to discuss them this evening since they are outside the main theme of the debate. There are three points which in particular seem to require consideration by my Department, and we shall give them that consideration, as the hon. Gentleman asked.
First, there is the suggestion that money should be made available to a national council for drama training, which body would be charged with recognising certain of the drama schools as deserving of public support. Secondly, the report suggests that, while most of the schools so recognised would find support through their local education authorities, a few might require direct grant from the Government, and it is proposed that this should be channelled through the Arts Council. We are still studying these proposals, but it will not surprise the House if I say that their expenditure implications

—which are not so great or extravagant as they might have been—give pause at this time.
There are also difficulties which arise from the concept of a grant by the Government to educational establishments through the medium of an independent training council and from the proposed involvement of the Arts Council, quite apart from the Government's attitude towards direct grant for establishments of further education. But the principal question we must ask ourselves is whether additional public money can be given to drama training when other priority areas of education are under severe pressure.
It is suggested in the report that local education authorities be advised to make discretionary awards only to students at schools which have been recognised by the proposed national council for drama training. Adoption of this recommendation would involve a major change in our awards policy, since the essence of a discretionary award is that it is for the local education authority to determine. Mandatory awards are not available to students at the drama schools, although this position could be affected if a drama degree course were established at a school and validated by the Council for National Academic Awards.
Having made those necessarily discouraging remarks on the financial implications of the report—which, I am afraid, are there despite what the hon. Gentleman said—I must make it clear that I am by no means undervaluing it. The Department welcomes a dialogue with those concerned about any developments flowing from the report and will offer help wherever possible. We should naturally want to keep in close touch with a national council for drama training if one were established.
There seems to be much that such a body could do, even without public funds, to create a more coherent and perhaps smaller system of drama training which would still be able to meet the employment needs of the stage and yet embrace a limited number of financially self-supporting independent drama schools whose students would, of course, continue to be the recipients of publicly-financed awards, thus providing State aid at one remove.
The proposal for a national council for drama training is an important one, and needs to be examined by my colleagues


responsible for training councils as well as by me. It would, however, be unrealistic to expect that the Government could staff and substantially grant aid a new body whose policies would be wholly independent of Government, and the way in which the task proposed for the council should be faced will need further consideration.
Finally, there is the matter of priorities. Resources are limited, and I should need the advice of the Arts Council on the difficult problem of whether the provision of drama training, the support for drama training, or the additional aid towards drama training by the State should take precedence over the crying need of the arts themselves for additional support from the Government to help them cope with the problems which press so hard on clients of the Arts Council these days,

when the proper determination of the Government to bring inflation under control is restricting developments in the arts at a time when they are bursting with the frustrated desire to expand. To be held back and to have to put off planned expansion is painful. But what about the drama schools? This is the question raised both by the Gulbenkian report and by the hon. Member for Wokingham.
All these are questions on which I shall need the advice of the Arts Council. But they are very proper questions, and I am grateful to the hon. Gentleman for giving us all the opportunity to give them their own priority in this debate.

Question put and agreed to.

Adjourned accordingly at one minute past Eleven o'clock.